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Investing in the Pyramids

If the emerging markets aren’t risky enough for you, check out the frontier markets.

Proverbs, Quotations and Bumper Stickers

Complaining and Explaining

Investing in the Pyramids


I’ve always had a soft spot in my heart for proverbs, quotations, even bumper stickers, almost any short saying that distills a bit of wisdom into a concentrated form. Whether I agree with the sentiments or not, I appreciate the compressed meaning in a phrase that’s clever or wise.

The investment business has thousands of these mini-lessons in circulation, everything from “Nobody ever went broke taking a profit,” to “The trend is your friend.” Like golfing adages (another fertile place for wise sayings), there’s often good advice in these apothegms, even if it is often contradictory.

I don’t have an investing maxim to discuss today, but I’ve been thinking about “Never complain, never explain,” a terse kernel of advice from the “hard-boiled” school that I’ve heard applied to leadership, political scandals (well, all kinds of scandals, actually) and personal demeanor, especially for tough guys.

I’ve always been skeptical about whether it’s really good advice.

There’s an attraction, of course, especially if the speaker is a Gary Cooper, John Wayne or Bruce Willis type in an action movie or a western. Explaining takes time. Complaining shows weakness. And tough guys don’t have a lot of time, patience or tolerance for sympathy … or questions.

Because I’m really an academic by training and like to get things correct, I decided to track down the original source for this gritty, four-word motto and ran into a surprise.

I Googled the saying, and on the results page that turned up, there were very authoritative-sounding attributions to four different people: Henry Ford II, Benjamin Disraeli, Katherine Hepburn and Sir Francis Bacon.

Depending on which one is correct, that means that “Never complain, never explain” has been around either since the 20th century (Ford and Hepburn), since the 19th century (Disraeli) or since the 16th or 17th century (Bacon).

Does it make a difference? Well, it does to me, because every proverb brings along with it the credibility of the person to whom it is attributed.

A saying or maxim or pithy quote gains force from the expertise, accomplishments and character of its original speaker.

And that’s why many sayings are attributed to people who never said them.

Given a choice, almost any saying would love to be attributed to Mark Twain or George Bernard Shaw or Oscar Wilde, because of the reputations they have for the cutting power of their insights.

I still haven’t gotten to the bottom of who’s really responsible for “Never complain, never explain” (although my best bet would be Disraeli, since that kind of bravura might have actually worked for a British Prime Minister in the 19th century).

Maybe I’m fascinated by it because my job as editor of Cabot China & Emerging Markets Report means that I’m constantly explaining (although not complaining). The performance of emerging market stocks is frequently volatile enough to need explaining, and figuring out why some market move happened—and how best to make it understandable—is a major part of what I do here.

If I just threw out stock recommendations and never said anything more about them, my life might be less complicated, but it wouldn’t be anywhere near as rewarding for me, or as useful for my subscribers.

So I guess I’ll have to be satisfied with just never complaining. (Yeah, right!)

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If you know almost nothing about emerging market stocks, you know that they come with high risk attached, including political risk, corruption, structural weakness and currency exposure.

But for some investors, even emerging markets are too tame, and for these people the lure of frontier markets can be strong.

A frontier market is one that hasn’t yet achieved the economic development, transparency or free flow of capital to qualify as emerging.

Want an example? Well how about Egypt?

Egypt has been dominating headlines for weeks, and if you want to see what political turmoil looks like when you translate it to investing, you can check out the Market Vectors Egypt Index (EGPT).

The chart shows a nice rally that began in July, and continued through to the end of 2010. But then the protests started and the ETF plunged from 20.5 to 16 in less than two weeks.

The chart also shows that many investors considered this an oversold level and bumped the issue back up to the 17.5–18.5 range, where it has been trading for almost two weeks.

You can see every news story reflected in the intraday chart of EGPT, including the rumor that came out on Thursday at a little after 10:00 that Mubarak would step down soon. That story pushed the ETF from 17.5 to 18.4 in about 20 minutes.

The Egyptian market doesn’t have many substantial stocks, and the ETF is dominated by one bank and one telecom.

But if you can’t get enough action from emerging markets, EGPT will give you all the frontier market action you can handle.


Paul Goodwin
For Cabot Wealth Advisory

Editor’s Note: Paul Goodwin is the editor of Cabot China & Emerging Markets Report, which Hulbert Financial Digest rated as the #1 newsletter for five years in 2009 and 2010. During that time, the Report rewarded subscribers with a jaw-dropping return of 154% (an average annualized gain of 20.5% every year) versus the Wilshire 5000’s gain of 15% over the same period. Don’t miss another winning recommendation. Get started today!

Paul Goodwin is a news writer for Cabot’s free e-newsletter, Wall Street’s Best Daily.