Announcer: Broadcasting from Baltimore, Maryland and all around the world, you're listening to the Stansberry Investor Hour. Tune in each Thursday on iTunes for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at Here is your host, Dan Ferris.

Dan Ferris: Hello, and welcome everyone to another episode of the Stansberry Investor Hour. I'm your host, Dan Ferris. I'm the editor of Extreme Value, that's a value-investing service published by Stansberry Research. We have a really cool show lined up with a really cool guest and a few other things today. Let's just get right to it. I'm going to get to the rant right now.

So, every now and then somebody asks me about the apparent contradiction of a value investor who recommends gold and gold-related businesses, which I've done in the pages of my newsletter Extreme Value. So, this is a question because if you know anything about Warren Buffett, he's the value investing god. He's the main value investor that everybody has heard of.

You probably know that he doesn't like gold. He says it's kind of absurd, right? You spend money to dig the stuff out of the ground, and then you put a stamp on it or you stamp it into a coin or a bar or something, and what do you do with it?

Well, you basically put it back in the ground because you just stick it in a vault somewhere and it just sits there, and it earns nothing. It pays no dividend. It's not going to compound. It's not a business at all. It's not a security. It's just a rock, and it's not even particularly useful because it's so expensive.

It is actually is very useful. It's a very versatile metal. It's one of the most ductile of all metals. You can take one ounce of gold, and you can stretch it into a thread five microns thick, and it would be 50 miles long. It's wild. So, it's potentially really useful, but it's so expensive that people wind up using other cheaper metals to do whatever it is you want to do with gold. So, Buffett is right in one way. We just keep piling it up.

All the gold that's ever been mined in the world is about 190,000 tons. That's about 6.1 billion ounces of gold that's sitting above the ground today. At recent prices it's worth about $7.9 trillion, and it trades maybe – we're just talking about physical gold here, not gold stocks or gold futures or anything like that – physical gold trades maybe $60 billion worth of it trades hands every day. Not a huge market compared to stock and bond markets and things that are tens of trillions, but not tiny either, right?

I recently learned for example that there's 1,600 cryptocurrencies in the world. They're worth less than $150 billion right now, all of them altogether, bitcoin, ethereum, everything altogether. So, it's bigger than some things and smaller than some things, but it's substantial I would say.

But let's get back to the point here. If Warren Buffett hates it and it doesn't really do anything for investors in the way of earnings and dividends and so forth, all the stuff he looks for, why do I like it so much? Am I not a real value investor? Am I breaking the value investing rules? I'd answer actually the last two questions first. Yes, I'm a real value investor, and no, I'm not breaking any rules by recommending investors hold some gold and invest in businesses whose value revolves around the price of gold and other precious metals.

So, let's deal with that first question. Why do I like it? First of all, value investing can be done different ways. Let's get that out of the way. Some value investors, they focus on small-cap stocks, and some focus on just financial companies, and some focus on consumer product companies. Some don't focus at all and they run huge portfolios of many different types of companies, but it's all value investing in general, and yes, some of them buy gold, gold bars, and gold mining companies.

There's absolutely nothing about value investing and gold that makes them mutually exclusive. Value investing does not preclude the ownership of gold, period, the end, that's it. So, just off the top of my head, David Einhorn is a famous value investor. He's owned gold for many years. Value legend Seth Klarman, one of the all-time great investors of any kind, value, anything, he's invested in gold mining stocks in the past. I'm not alone. I'm not the only value guy who does that.

So, I've recommended to this point two companies involved in the gold industry, each in different ways and in different degrees in my newsletter Extreme Value, and we're actually about to recommend a third gold-related company in the April issue of Extreme Value. So, you have to understand that with the businesses, value investors can do that. Anything that's a business generates a stream of cash flow, you can put a value on it, and theoretically buy it for less than that value. That's value investing. That's what it's all about.

That's not hard to understand, but the real thing about Buffett is this problem with owning this rock that doesn't earn anything or generate earnings, and I think you should do this. I think you should own some physical gold, maybe some Krugerrands or American Eagles or if you have more money than that and you want gold bars or something like that, and here's why I say that.

First of all, gold is money. It's been money for thousands of years. Historically speaking, fiat currencies like paper money, the stuff in your pockets right now and in your bank account, they've done very poorly, and they've often failed throughout history. Gold may not have appreciated substantially over the past 100 years, but it has maintained its value unlike I can point out the U.S. dollar which has lost better than 95% of its value during that time, and that's what it's supposed to do. That's what gold is supposed to do. It's supposed to maintain its value.

Nowadays you can't go to the store and pay for things with gold, so when I say gold is money, I don't mean that. I just mean it's been money throughout history, and I believe it will always have that function whenever anyone wants it to. Whenever a society doesn't know what to do, if they just go to gold for their money I think it'll treat them pretty well. When currencies go bad, or if they just go through a rough patch, if the U.S. dollar goes through a rough patch and we see big inflation, gold will be the thing to have, and those things tend to happen quickly.

You think you can kind of forget about them and then you say, well, I'll buy gold when that starts to happen. Eh, probably not. It'll probably be too quick and the price of gold will move up, and then the value as insurance will have already been realized, right? So, if you're not insured against that kind of event, it's hard to play catch-up, and that's what physical gold is to me at this point primarily. It's like disaster insurance. You hold it hoping that you'll never really need it.

But there's something else. Sooner or later, and this may never happen during my lifetime, sooner or later the world may feel the need to return to a gold-backed form of money, and if you have some, that would be good for you. If you listen to Episode 87 of the podcast, we spoke with Frazier Buck in from Tradewind Markets, and that company has a technology that I think may lead to the return of gold as money. They're working on this gold-backed crypto token.

So, it's like bitcoin but it has something of real value behind it. This is probably a longshot. I'm not saying it's going to happen tomorrow or even ever, but it could eventually happen, and I think if it does, this technology that they have is probably a step in that direction. So, that's what gold is to me. It's money, it's financial system and financial disaster insurance, it's currency devaluation insurance, and I think you should own some.

I hate to put a number on how much you ought to own because there are many variables there and it depends on you. Maybe you just don't like gold and you're kind of on the fence about it so you might only buy a little. Some people are all in, they want to buy a lot. It's up to you. It's a personal decision like we talked about a few podcasts ago. Investing is personal. Maybe you don't want to put tons of money into it. Maybe you don't want a lot of capital just kind of sitting idle. I can understand that.

So, you just buy a little and you put it away and you keep it someplace safe, and you hope you never need it. To me, that's what gold is about, and that's what I recommend you do and that's why I recommend that you do it. OK, that's the rant. If you loved it or hate it or somewhere in between, just e-mail us at [email protected] and let us know what you think. Let's find out what's new in the world.

First of all of course, the one thing we kind of can't not talk about, we must talk about it, is the Lyft IPO. So, Lyft IPO'd at $72 a share and it peaked around $90 last Friday, and as I speak to you it's still below the IPO price. Maybe by the time this podcast gets to you it'll be back above it, but it's not faring too well and that doesn't surprise anyone, right? Lyft is losing money. It had an exorbitant valuation and there's no justification for it.

The justification for an exorbitant valuation is making a lot of profit and they don't do that, therefore it makes all the sense in the world that the share price should kind of take a pretty big hit. So, what do I think you should do? Well look, we've seen this a million times, right? It happens in every, usually toward the end of every big bull market where you get IPOs of unprofitable businesses that everybody is in love with and everybody gets excited about it, and everybody buys it, and then the thing crashes 90% and never makes it back up again and wipes everybody out.

Of course Lyft and Uber have an interesting business model. I use the service all the time. I love it. I hope they can make it work and make it profitable so that I can keep using the service, but if they don't do that, and even if they do that, they're probably inviting competition the more successful they become, so we'll see. We'll see how that works out. Couldn't not say something about that.

Let's talk about the world's most profitable company. I wonder if you could guess what it is? I didn't know this. I saw it in the news earlier in the week and I went, what? The world's most profitable company, you might've said Apple. Nope. In terms of the amount of profit is Saudi Arabian oil company Aramco, the giant Saudi Arabian oil company. They generated $224 billion in profit last year. I mean, wow. How would you like to own a piece of that?

They were going to do an IPO, and I never understood why. They don't need capital, they have capital pouring out of the ground. They've acquired those assets at very low cost, they produce at very low cost, and they're obviously still minting money. Apple is like a distant second with like $80 billion. So, I don't even know what to make of this statistic. I'm just fascinated by it. I'm fascinated by all of the largest everything, and I just wanted to point that out to you.

So, this is weird. Burger King goes vegetarian. What? So, Burger King and this company called Impossible Foods announced the rollout of the Impossible Whopper, this vegetarian patty that they're going to make a Burger King Whopper out of, and it's going to be 59 stores in and around St. Louis. I have to tell you, St. Louis, the home of some of the best barbecue in the country is not the place I would've picked to rollout a vegetarian Whopper.

I would've gone to a city that's kind of near where I live, Portland, Oregon, for a vegetarian rollout. I don't even know what to make of this, but I do think it reflects a couple of things, and one of them is actually the success of the fast food franchise business model, the McDonald's and Burger King and so forth. They change and they deliver what the market wants.

You remember a while back Starbucks was having trouble because McDonald's came out with coffee, and their coffee drinks were pretty good and people were buying them. They still buy them because the market was evolving and McDonald's wanted to offer what the market wanted. Even long before that, just salads, just had a burger joint getting salads, and that's what this is. They're responding to the marketplace.

It won't surprise me one little bit to see, if this works for Burger King, it won't surprise me one little bit to see something like this maybe at McDonald's or at another competing fast food franchise, and it's normal. That kind of testing is normal, it happens all the time, and it's one of the great things about those businesses.

OK, the other thing that I wanted to touch on real quick was just a headline that I saw. The first one was in the Wall Street Journal, it said "Fear of missing out pushes investors towards stocks." Fear of missing out, FOMO, right? So, I contend that we're toward the end of a long bull market. It's been 10 years that we're in this bull market, and I contend that bull markets usually don't last much longer than this and the valuations are getting stretched and it's looking very late in the game.

And I think this is the type of headline you see at that time. When investors start getting really afraid, when more and more investors start getting afraid of being left out, it's a very typical sign of being somewhere in the neighborhood of the end of the bull market episode. Of course you won't catch me predicting when that end will arrive, because you know my mantra. If you read the newsletter that I write, you know what it is, right? You prepare, you don't predict, because predicting has low odds, but preparing is prudent, right? So, I'm not predicting. I'm just saying this is the kind of thing you see.

Another thing you see, and I've seen a couple of headlines like this, the Financial Times ran something with the headline "Not all value metrics are created equal" and we'll cover that in the mailbag too today. Basically the idea is when you've got 10 years of growth stocks outperforming value stocks, people start to talk about value as being dead. They say value is dead, value investing doesn't work anymore. It's just the typical thing.

And this article said basically if you measured – I think they measured something like 10 different value metrics since 2009 to now, so they're measuring the effectiveness of the value metrics during the growth-dominated bull market. It makes no sense. You can't use that piece of data to say that value doesn't work anymore because it's a growth-dominated bull market. It just made no sense to me. Anyway, those are just the kind of things you see at the end of a long bull market, OK?

It's time now – that's what's new in the world – it's time now for our interview. I can't wait to get to this guy. Let's do that right now. OK, it's time for our interview. This is going to be really fun. This week we have Kim Iskyan. Kim is the publisher of Stansberry Pacific Research. He's spent most of the past 25 years exploring and analyzing global markets. Kim has been a stock analyst and research director for a big emerging market investment bank, he managed a hedge fund, sold mutual funds to private bankers. He's also advised Fortune 50 companies on political risk and helped build stock exchanges from scratch in countries that few people can even find on a map. Wow.

Kim has lived and worked in 10 countries, including Spain, Russia, Sri Lanka, and the United States. He now lives in Singapore – we're going to talk about that today. Along the way he's learned something about how markets work and what matters and doesn't matter in the world of investing. One of his main objectives in launching Stansberry Pacific Research was to explain the reality of the worlds of finance and investing, separate truth from fiction, and help everyday investors look out for their own best interests. With that, welcome, Kim to the program.

Kim Iskyan: Thanks, Dan. He sounds like a pretty interesting guy. I'm excited to meet him.

Dan Ferris: That Kim, he's something, isn't he? So, Kim, maybe we'll just spend a minute or two here talking about – it sounds like you've had all kinds of different experiences before you came to Stansberry. Do any of them stick out in your mind as being especially valuable to you now as you look back on them?

Kim Iskyan: You know, Dan, I think probably the thing that's most valuable to me is that when I was a kid, I grew up in Spain and my mom is Dutch, and for summer vacation we would pile in the car and drive. We would drive through Europe back when not that many people did that sort of thing, back when Europe, you had to go through different currencies and it was a big deal to cross the border. I figured that this was just what people did, that people just went off and they traveled and this was just part of the fiber of their lives.

It wasn't until much later that I realized most people don't do that. I guess that sort of thing, just going to different places and saying, you know, I'm in a brand-new place, or can I get to a brand-new place and learn about it? That sort of thing I started when I was very young, and it's just kind of what I do. To me, that's the most exciting thing. I get tired and bored of living in the same place for too long, even though I don't know it at all. You can't really learn a culture unless you spend your entire life in a place, understanding language and the traditions and really understanding.

But I feel like I know enough about a place after a few years and I think, OK, what's next? So, I guess the short answer to your question, yeah, what really drives a lot of what I do now and what I've done is just what I assumed was the standard of what people do when I was a kid.

Dan Ferris: I see. I was asking about your financial experience, but what you're telling me is that's not really the driving force. It's this wanderlust is more important to you than that.

Kim Iskyan: Yeah, you're right. What I was talking about wasn't directly about investing, but it kind of goes hand-in-glove. Here at Stansberry Pacific Research, we do look at markets in Asia quite a bit. We look at China a lot, we look at Singapore, and part of what I also look at is markets that are completely off the radar and markets that people either have never heard of or have never really realized, actually our markets that are investable. It's almost past the contrarian notion. It's past the out-of-favor. It doesn't even exist on the out-of-favor or in-favor spectrum.

Dan Ferris: Off the radar.

Kim Iskyan: Yes, exactly. I guess that's part of what I do as an investor and as an editor. It's part of what I push my people to do, to look for those things that are off the radar. So, I guess my life experience has informed that approach to investing.

Dan Ferris: I see. Before we talk more about investing, I do want to talk about Singapore because the place kind of fascinates me. First of all, why Singapore?

Kim Iskyan: When I was 20, my grandmother wanted to take a trip to Indonesia on a tour trip with a bunch of old Dutch people, and she wanted someone to carry her bags, so I joined her. We passed through Singapore, and even then, this was 1990, it was such an exciting place. It was my first trip to Asia at the time, and it was amazing. I thought, wow, if I could come back here that would be fantastic. I wound up coming back here a number of times for work. It's a major financial center.

I came back through here to speak with investors, and then years later I lived in Sri Lanka for a few years and it's pretty close, so we visited a number of times. And then Stansberry said, "You know what? We want to see how we can develop a business in Asia. Would you be interested?" I said, "Of course I would be," and Stansberry said, "Pretty much the places you want to go in Asia if you're developing something in the investment arena are Hong Kong or Singapore."

Hong Kong is kind of like an Asian New York in some ways. It's huge and it's busy and it's bustling and it's dirty and it's exorbitantly expensive, and Singapore is kind of like Disney meets George Orwell's 1984. Everything is incredibly clean, it's efficient, it's safe, it works. Stuff works here.

Dan Ferris: What's the 1984 aspect, though?

Kim Iskyan: The 1984 aspect is that if you don't fit in a box or if you want to break the rules, you suffer quite quickly. In the U.S. if you want to say something bad about the president on your Facebook post on Facebook you can do that, right? If you do that here, you get arrested. You get kicked out of the country if you're a foreigner. When I cross the street and the little traffic signal man is red, even if there's no traffic around, I stop and I wait because it's what people do here.

Here if you don't follow the rules you get in trouble very, very quickly, and there's really not much freedom of the press. For most people, I mean to me, that's a pretty good compromise because I don't need to say bad things about the government in public, and I'm perfectly happy with following the rules, and I'm more than happy for my kids who are ages 12 and 14 to go off all day by themselves with their friends into the city and I don't have to worry about them at all. But the 1984 aspect is a – Singapore is kind of a smart city, cutting edge, so there are cameras everywhere and they are very focused on guiding your behavior to do what's best for you, which on the one hand makes a lot of sense, right?

You don't want people to smoke. You want people to drive safely. Here they cultivate policies to guide people in that direction, whereas most of the rest of the world so many policies are just kind of chucked up on the wall and whatever sticks, sticks. But here pretty much the smartest people go and work for the government, and it's prestigious if you go and work for the government, whereas in most of the rest of the world it's the bottom-feeders who go and work for the government.

Dan Ferris: Wow.

Kim Iskyan: It's funny, I know that a lot of, well, in the investment newsletter world, marijuana and pot stocks is a huge thing, but here if you bring pot into the country, I don't know if you'll be executed, but nothing good will come of it. If you're not executed, you're put in jail for a very long time, so we have never run a pot promo and we never will. It's not like anything is going to happen, but by the same token I don't want to touch that. I just have in the back of my mind some things you just don't go close to.

Dan Ferris: Is it OK for you to talk about it in your apartment there? I don't want to get you in trouble here.

Kim Iskyan: I think because I'm being very respectful of the Singaporean government it's OK.

Dan Ferris: OK. Wow. But you mentioned Hong Kong is crazy expensive. I thought Singapore was crazy expensive, too?

Kim Iskyan: Singapore is crazy expensive if you are not Singaporean and you have to send your kids to an international school, and if you own a car. To put a car on the road here, depending on the make and everything else, it's probably about four times as much as it would be in the U.S., because you have to pay for a license to put a car on the road, and the government auctions off these licenses. So, the license can cost twice as much as the price of the car.

As a result, there's no traffic here. If you have to wait for an entire cycle of the traffic light, then people complain there are traffic jams all over the place. People here don't know what a traffic jam is. If you don't live close to the center of the city, for a few thousand dollars you can get a nice apartment. In Hong Kong you can't. It's just much, much more expensive, and here you can find your spot and find a local grocery store. For someone who's visiting, yes, it's very expensive. For someone who insists on sort of the foreigner lifestyle, yeah, it can be really expensive, but you can find your way.

Dan Ferris: It's doable.

Kim Iskyan: It's doable, yeah.

Dan Ferris: So, you went there and you started up this newsletter called International Capitalist, right?

Kim Iskyan: Yes.

Dan Ferris: When did that start?

Kim Iskyan: Well, I came to Singapore about three and a half years ago to launch Stansberry Pacific Research at, and then I launched International Capitalist about a year and a half ago. It does look at special situations in global markets, whether it's stocks that are mispriced, markets that are out of favor, things that you wouldn't find in emerging and frontier markets, markets in general are nowhere near as efficient as they are in the West, and certainly in the U.S.

Even though I know, Dan, a lot of what you focus on is finding those inefficiencies, and there are lots of inefficiencies in U.S. markets, but if you multiply that times 10 and you're looking at frontier markets and emerging markets. So, I try to find some of those most obvious opportunities and explore them and dig down into them and recommend to subscribers.

Dan Ferris: Right. So, when you and I were e-mailing before the interview here, you talked about the Asian explosion and specifically how far behind the U.S. is. What do you mean by that? How is the U.S. far behind Asia?

Kim Iskyan: Well, first, I'd be the last person to say that Asia does not have problems. Asia is 48 countries and 2,000 languages, so there are a whole lot of moving parts, and Asia is everything from Bangladesh to Singapore, one of the most poor countries in the world to one of the wealthiest. But I think that if we look at more developed parts of Asia and certainly developing, even like much of China, much of Thailand, if you look at the efficiency, you look at how things work, you look at the quality of the infrastructure, you look at the – a lot of ways the quality of the workforce.

A way that I sometimes think about it, Dan, is whenever I visit the U.S. and you fly into the U.S. and you're at the airport, whether it's Dulles in D.C. or whether it's Philadelphia or wherever you are, the airport is decrepit, it's dirty, things are slow. It's inefficient. It takes forever to get your bags. The kind of people there who are working, whether it's immigration, wherever in the airport, it seems like they don't really give a crap.

I don't know if it's a sense of entitlement. I don't know if they feel they aren't paid enough, but they don't really want to be there. If you're a foreigner trying to get into the United States, god help you because those lines are crazy. You sometimes see them in other markets and other countries, but oftentimes the United States is the worst. It's something I just don't understand. The United States was built on smart foreigners going to the country, and now the United States is doing everything they can to keep them out.

But anyway, you get into the United States and the infrastructure is falling apart. You can't get a cell signal. Just basic things are literally falling apart. The average level of – this is a terrible thing to say – the average level of intelligence and worldliness and just sense of what is going on in the world of people that you come across in general is so low. That's such a –

Dan Ferris: No, it's true. It's a very provincial place because it's such a huge country, right?

Kim Iskyan: Yeah, and you find that sort of closed-mindedness elsewhere, but I was just reading in Singapore, nine out of 10 people every year leave the country. Now the country is the size, you can fit all of Singapore almost within the beltway that is sort of the Washington, D.C. suburban and urban area. It's a tiny country, so of course people leave all the time, but two-thirds of Americans don't even have a passport, so they've never even left the country, which is totally mindboggling to me. I don't know.

Here and Singapore and so many other parts of Asia, things are just so much more efficient. A few months ago we needed a new garbage can to be picked up by the garbagemen, and I thought, oh boy, how is this going to work? I know everybody has the same garbage can, so you have to call some phone number. I called the phone number which took me two seconds to find out because it was on the side of the garbage can of the neighbors, and the phone conversation lasted literally a minute and a half, and then the next day I received a garbage can.

I thought if I was in – I used to live in Arlington, Virginia outside of Washington – if I was in Arlington I don't know. You call a number, somebody wouldn't be there, you'd go through this whole rigamarole, and that sort of encapsulates the – whereas so much of the rest of Asia views growth and opportunity. People so often want to work. They're trying to find their edge, they're looking for that, and it feels that a lot of the spirit that maybe used to exist in the United States has fizzled out, and now you see so much of that in this part of the world.

Dan Ferris: I see. A moment ago you talked about markets that are pretty much off the radar, and the current issue of your newsletter has one of those. Maybe you can tell us a little bit about it. I know I know nothing about it whatsoever, nothing.

Kim Iskyan: Yeah. In International Capitalist, most of what I look at are stocks that are listed on whether it's London or Hong Kong or sometimes even New York. Sometimes I look at things that are a lot more obscure that you can't easily buy into, and this is actually one of those situations. This is a country called Uzbekistan and it's one of the five Central Asian countries. If you're not really familiar with that part of the world, it's kind of that jigsaw puzzle where Pakistan, Afghanistan, and Iran are all kind of crunched between Russia and China.

Uzbekistan has 33 million people. It's mostly Muslim. It has a lot of gold, a lot of uranium, but what's interesting to me is that after the end of the Soviet Union in the early 1990s, some countries went off and they liberalized and they became part of the rest of the world. You look at the Baltics which are now part of Europe very much so. You look at what Russia did. Russia went a different path, and then what Uzbekistan did, the leader of the country acted that he wanted to be kind of North Korea-like.

So, Uzbekistan was totally closed off from the rest of the world. It had one of the worst human rights records. It had levels of human slavery that were on par with North Korea. Journalists were murdered all the time. It was a total police state. Because it was – it's pretty obscure, it's in the middle of a big land mass that a lot of people from the rest of the world don't really pay much attention to, he was able to do this quite easily.

Well, this guy died about three years ago, and the assumption was that the next guy to take over would be – he would do pretty much the same thing because you have the elite that was benefiting. You had the senior people in government and certain people who were benefiting from this twisted, awful system, but the new guy came in and it turned out that he wanted to do something completely different.

I don't really know what a good metaphor is, but he decided he wanted to reform the economy, he wanted to open up the country, he wanted to actually become friends with the neighbors, and unlock all of the assets, all the companies that have been owned and controlled by the state during this whole time. After the end of the Soviet Union, the government controlled pretty much all of the vehicles and any asset of any value, any company who was state-owned. Most countries have privatized those assets; Uzbekistan didn't, or at least they didn't to any real degree.

So, the new president took over and said we're going to privatize all of these assets. We're going to figure out what works. We're going to let foreign investment in, and we're not even going to require people to get a visa to come into our country, and they can repatriate capital without a problem.

So, this is a country that went from having virtually zero foreign investment, zero knowledge of how to do business in the rest of the world, to over just the past few years opening up almost completely, which presents enormous opportunities because a lot of those assets that are being privatized are – they're not exactly high quality, world-class assets, but they're incredibly cheap, and they are in the middle of a country that is experiencing very strong growth. Uzbekistan is growing at like 5% a year, and it's going to accelerate in coming years.

In any case, what I'm talking about in this issue is some of this background, some of this context, and there's one way right now to invest in Uzbekistan, and it's through a small hedge fund that just a few days ago launched and it's run by a bunch of people who I've known for a while who are very, very smart in these sorts of frontier markets. I think it's the sort of thing in my mind you invest a small amount of money in and you just forget about it.

There's some markets that are growing so fast where so many things are going to change over the next 10 years and your money will go up 10 times, and you don't have to do anything, you don't have to think about it. Obviously nothing is inevitable, but there's some things that are just so kind of blazingly obvious that make so much sense, that as long as no one is completely incompetent when they're managing your money that you're going to make a huge return on what you invest. This is one of those things.

Dan Ferris: I see. It sort of sounds like one of Steve Sjuggerud's bad to a whole lot less bad, maybe.

Kim Iskyan: Yeah. I like Steve's model for that because it's very true, and I've seen it in so many markets where things are awful, and you just make a few tweaks and all of a sudden these seismic changes happen. And that's what's going on in Uzbekistan right now, just a few tweaks. One of the big tweaks they've made, there was a big currency black market. I visited Uzbekistan 25 years ago, and you could either get the local currency at – there's a two-times difference between the black-market rate and the market rate, and if you bought currency at the market rate, everything was incredibly expensive. If you bought currency at the black-market rate, things were pretty cheap.

Dan Ferris: Nice.

Kim Iskyan: To get currency, I had to go to the local bazar and find the right guy who was wandering around muttering under his breath the exchange rate.

Dan Ferris: Oh, that's cool stuff.

Kim Iskyan: It's what everybody did. But the new president a few years ago said, "We're done with that" and just overnight the currency devalued by 50%. The thing is, in most political environments, all of a sudden imports double in price, right, when the currency collapses like that?

You would think there would be mass revolution, there would be some sort of enormous uproar, but this just kind of passed. It happened. Whether it's because people in Uzbekistan were so used to being beaten down so they kept their mouths shut, or whether because they realized that this was a critical step toward dramatically improving the quality of their lives in the longer term.

Dan Ferris: Gotcha. That's cool. So, your advice in this issue of your newsletter where you talk about Uzbekistan is, we're not going to give it away because obviously people subscribe to your letter so we're not going to give it away for free, but it's to get involved with a hedge fund, really. It's not a specific stock.

Kim Iskyan: Yeah. When I went to Uzbekistan a few months ago, I went around with a local broker who's a fantastic help and a very smart guy. He said, "Here the paperwork is, and it's quite easy for you to open an account." It's certainly an option. I have accounts all over the place and I didn't want another brokerage account. That's certainly an option for people, but I know that in practice, a few people, a few investors even, investors who are contrarian and like looking at these sorts of markets, they're just not willing to go that extra step and open up an obscure account in Uzbekistan and take that leap of faith and wire money to Uzbekistan. So, yeah, this particular fund takes care of all of that for you, and also for the normal investor to figure out what stock to buy in Uzbekistan. One of the things about these sorts of markets is it's very difficult to find out any information, and it's going to be in Russian. If you can read it, it's really great. But then a lot of the management of these companies, they're brand new to the whole idea of having minority investors, because the only "investor" they've ever known has been the government, and now all of a sudden they have small investors who are also shareholders. So, I would far prefer to have somebody who is there who is very active and understands the dynamics of the different companies than to try to poke around in that myself.

Dan Ferris: That makes a lot of sense.

Kim Iskyan: Yeah. Sometimes the fund makes a lot of sense, and this is one of those. I can't pretend to know which bank or which cement plant or which beverage makers do well in Uzbekistan.

Dan Ferris: Right. That's cool. We're not going to give the advice away, but we do have a special deal for everybody listening to the podcast, and it's a website called, and it's 60% off, wow, for Stansberry Investor Hour listeners. You get one year of Kim's newsletter International Capitalist for $999 backed by a 30-day 100% refund guarantee. Wow, what a deal. I might do that.

Kim Iskyan: It's a good deal. I think a lot of what we look at, Dan, are stocks and markets that can really go up dramatically. I sometimes look at what – people spend so much time analyzing the S&P 500 and I think, OK, if everything goes really well, you'll make 15% next year. I don't know if it's 5, 10, 23%, whatever, whoever you are depending on where you are in life and the risk tolerance, why would you not take that amount of money and say, you know what? I'm going to put it in some of these markets that I'm not going to check on for 10 years, and my kids or grandkids can appreciate that later. That's what I aim to do.

Dan Ferris: Absolutely. Kim, we've actually come to the end of our time. I have to tell everybody I'm kind of a fan of Kim's in general because his life fascinates me, so I'm always really interested to talk. You have not disappointed with this Uzbekistan stuff. I totally agree with the investment proposition. It's off the radar, nobody knows it's there, one of these places privatizes, and before you know it it's like you say, you make a puny 15% on the S&P 500 if you're lucky and you can quickly get these quick doubles and triples out of stuff like this.

It's pretty cool. Once again, the website is, 60% off of Kim's newsletter with a 30-day 100% refund guarantee, great deal. Thanks for being here, Kim, and thanks for talking with us. I appreciate it. I hope you'll come and do it again sometime.

Kim Iskyan: Thank you, Dan.

Dan Ferris: OK, time for the mailbag, Listen, the mail is very important. Sometimes we don't get a lot of mail, and that disappoints me because I like to hear from you. Your feedback is extremely important to the success of the podcast here. So, just e-mail us at [email protected] I want to hear from you. I want to hear what you have to say, questions, comments, telling me how wonderful I am, anything you want to do. Let's just look at a couple of those right now.

Number one here says, "Thanks for the book recommendations. I'm going to add the three books I don't have." We made some of those in last week's podcast. "Question: At the conclusion of your segment on pension funds, you make the statement, 'Be careful on the pension funds.' What does that mean? How do I be careful in the pension funds, or more specifically the pension I'm receiving? Thanks for your great podcast and valuable insight, Paul E."

Well, Paul, if you recall, I was talking about an article that looked at all the state pension funds in the country from the year 2000 through the year 2018, and I don't remember the specific numbers, but it said basically they did something that I think too many pension funds do. They overestimated the amount of return they were going to make, which is essentially overestimating the amount of assets you're going to be able to distribute to people on a pension. And they wound up making like 2% a year less.

I just said, you know, it might be a good idea for anybody who's going to receive a pension to know what they're projecting and to be a little realistic about them achieving those projected returns. If they're projecting 9-10% a year over the next 15-20 years, well, you ought to know that from these kind of valuations, certainly the S&P 500 has never performed that well, rarely performed that well I should say, like 90% of the time it's done pretty poorly.

So, you want to know that. That's what I meant. You want to know what the fund is projecting from this point forward so you can kind of adjust back to reality. As far as the pension you're receiving now, you're already getting paid based on those previous projections. Depending on how much longer you expect to get paid, you certainly want to know what they're projecting, right? That's what I meant. Good question.

Mailbag number two says, "Hi, Dan. Love listening to your show. My question concerns Benjamin Graham's The Intelligent Investor. In this latest episode you recommend reading and rereading chapters 8 and 20. My edition of this book has only 16 chapters. What is the title of your chapter 8? Well, it's "The Investor and Market Fluctuations" and I thank you for this question. I forgot that there was any other edition that had other than 20 chapters. I'm glad that you're reading the book, very smart. That's Carl P.

Let's do one more of these. Mailbag number three, "Hi, Dan. Would love to hear your thoughts regarding the article below from Richard. Thanks." And then he sends me an article by Dr. Richard Smith who we had on the program some episodes ago. Well, the title kind of says it all, it says, "Why growth could keep dominating value, and why risk control is more important than ever," by Dr. Richard Smith.

Then there's – I'll just read a little quote from the article. He says, "The reason growth could beat value for years to come as we explained in our breakdown of the Kraft Heinz debacle is because the nature of motes has changed. The old motes were simple and static; the new motes are complex and dynamic. This puts all manner of companies under threat and makes value investing a more perilous proposition than it once was. When the rate of technological and sociological change were slower, at least slower than it is now, it was a lot easier to invest in value stocks as a general rule because business models weren't so readily exposed to obsolescence or extinction."

I agree with the second half, and the primary thrust of this article actually is not the growth value thing. It's just Richard's constant message, which is absolutely spot-on. This is one of the things I love about Richard Smith is that risk control is very important at all times. I don't care what kind of investor you are. If you do technical analysis, if you throw your underwear against the wall and see where it lands on the floor and make stock picks based on that, it doesn't matter, OK?

Your risk control, no matter how you select those positions, is much more important, and Richard knows that. He's done the work and he knows it better than just about anybody I personally know. So, that's the point of that article. I do disagree with him however on the nature of value investing, because what happens is that value investing simply recognizes, for me the primary essence of value investing is this idea of margin of safety which says that you should sort of figure out what something is worth approximately, and you can only ever do it approximately. You can never do it precisely when it comes to valuing a business, that is.

And then you should try to pay certainly no more than that, and ideally speaking less than that value. That's the essence of value investing. So, it really doesn't say anything about specific businesses. You can be a value investor and buy Google. In fact, I saw a presentation recently by a guy named Whitney Tilson, and it really made a really great case for Google, and I would suggest that it was kind of a value-oriented case about some hidden value inside the business.

By the way, we're coming to you this week from South Carolina from our annual editors meeting. We do this every year. We get all the Stansberry editors and all the Stansberry marketing people together and we exchange ideas, and all the editors stand up and they say, "This is my best idea."

So, that's why I got to see Whitney's presentation this week, and that's why you probably hear all kinds of funny noises in the background, but this is a really valuable thing that we do. It really benefits you quite a bit. I just want you to know that value isn't about specific industries or specific assets at all. It's about not overpaying for assets. That's primarily what it is, and we go through these periods all the time where people say value has stopped working, and I saw other headlines to this effect recently. I didn't need to collect them all in front of you.

That's a good question and I'm glad you forwarded me that article. I'll have to give Richard a thrashing the next time I see him. And that's it, that's the mailbag and that's another episode of the Stansberry Investor Hour, OK? So, make sure you check out the website.

You can go there, you can listen to every episode of the podcast that we've ever done, and you can scroll down on each episode and there's a transcript down at the bottom, and you can enter your e-mail address at that same website and get all the latest updates. Just go to that same address: That's it for this week. Thank you very much. It's my pleasure to speak to you once again, and I look forward to doing so next week. Bye-bye.

Announcer: Thank you for listening to the Stansberry Investor Hour. To access today's notes and receive notice of upcoming episodes, go to and enter your e-mail. Have a question for Dan? Send him an e-mail at [email protected]

This broadcast is provided for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear. Stansberry Investor Hour is produced by Stansberry Research and is copyrighted by the Stansberry Radio Network.

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