Last week, I began to make the case that the investors should pay far more attention to the country environment in which prospective companies are domiciled than they, and Wall Street commonly do. Some got it; some didn’t.
I want to take the conversation to the next level of detail. Let’s approach this question by reasoning from basic principles. We know from 4,000 years of recorded history what does and doesn’t work when it comes to national prosperity. The Scriptures speak to these questions, as do the other great books of Western Civilization. The founding fathers of the U.S. have probably captured these truths better than anybody, and codified them into the Declaration of Independence and the Constitution of the United States of America.
The Great Books give us enormous amounts of insight about how to be a successful man, and about how to be a successful nation. However, there is simply no body of knowledge even remotely comparable of similar pedigree about how to be a great publicly traded corporation. The modern, limited liability, publicly traded company is rather new in human history.
Yes, there’s a slew of In Searches of Excellence and Goods to Greats, etc. which have appeared in our generation. Most of them contradict one another and have very poor track records when it comes to identifying future successes.
When it comes to knowing the right principles on which to build a prosperous nation, humanity has no excuse for choosing wrongly. But when it comes to avoiding loops of doom, deciding whether to delegate or to sweat the details, whether to synergize or specialize, whether to manage by walking around and solving problems or manage by ignoring problems and pursuing opportunities, whether to run tight ships or to inculcate chaotic innovation among armies of shorts-wearing, Ping-Pong playing, cubicle-less knowledge workers, humanity is still figuring this out—at least, I am.
As countries pursue policies of currency devaluation, country choice grows in importance. Whether you know it or not, when you buy a company, you’re buying a currency, and when you buy a currency, you’re buying the quality of decision-making of its central bankers. Every time you buy an American stock or bond, let me suggest that instead of just picturing the CEO of the company, you picture Ben Bernanke as his co-CEO, because he is. Stocks and bonds are, in the final analysis, pieces of paper promising units of currency in the future. If the company is an American one, these are promises of future dollars.
Bernanke is your business partner whether you realize it or not.