Posted by: Martin | October 2, 2011

Doug Casey on Africa

Rewards are more than commensurate

I was listening to an interview with famous investor Doug Casey, and not at all looking for, or expecting anything Africa-related. But in the middle of it, there’s the following exchange:

Casey: If I was going to advice somebody getting out of high school right now. I would say take the money and the time you would spend going to college which is what everybody else is doing. It’s usually a mistake to do what everyone else is doing.  And figure out what you should really do. Perhaps it would be to travel around the world with a backpack for a year looking for oppurtunities to start with. I can think of  lots of things but not go to college and take liberal arts.

Interviewer: Fair enough. You mention in one of your blogs that you are long and buying in Cairo right now. You said that Africa was the best place  in the world. Do you recommend that a young kid buys a suit and heads to Africa or what are you doing there, what do you see for that continent?

Casey: Well, there is about 50 countries in Africa. They are all very different. Most of them are quite backward, quite isolated, and I think that is the place to go. In Egypt right now everybody knows [inaudible] buy when blood runs in the streets. It’s harder to do in fact than it is in theory because it’s scary, but I’m involved with several friends buying apartments in downtown Cairo right now. Beautiful belle epoque apartments with 14 foot ceilings in classic buildings that are falling apart, because they have been rent controlled for the last 40 years. So we are buying the apartments, we are paying people key money to move out, we are renovating them, and the economics are such that I think we should be able to double our money in a couple of years on a cash basis.

So you look for things like that, but in every country in Africa you go to… I suggest Africa because it has the most anomalies, because it gets the least traffic from outsiders. And if you go to a country like Cameroon or Gabon or the Congo for instance. If I was landed in one of these places naked and penniless, I’d like to believe within a few weeks I could be sitting down with the president. Part of it is the more than 50 mile away phenomenon. Anyone that’s an outsider, they don’t really know who you are, they can’t find out, but if you are sharp, keep your eyes open, have something to say, something to contribute, you can do things there, because you are special you are different in those countries. Here, you are just one of millions other people just like yourself. So that’s why I go to Africa, it’s still kind of a last frontier.

Interviewer: Still probably one of the riskiest places to be.

Casey: Yeah, but the rewards are more than commensurate.

Another recent interesting optimistic piece about investing in Africa is an article in Wall Street Journal entitled Spelling Out Growth.

At a second thought I’m investing in Africa and then I focus on positive stories on investing in Africa – that’s quite a set up for confirmation bias.  So to counter that I’ll include some of the zerohedge comments to the Casey interview:

he lost me at “buy apartments in cairo”…  seriously, cairo has got to be one of the most dangerous places to be right now, ground zero for the beginning of the third world war.. i would rather take my chances in the bond market.

yes i agree !    i’d rather invest in a daycare center run by Casey Anthony, than buy Cairo apartments right now…geez

Hard to believe that Cairo would be a good place to invest at this time but Doug sure as hell won’t have much competition there or other parts of Africa, except of course, from the Chinese and the “good” Al Qaeda, as usual, funded by the west and currently dropping humanitarian bombs on Libya,

Feels much better now.  Time to re-quote Oscar Wilde: “Whenever people agree with me I always feel I must be wrong.”  and Casey’s “It’s usually a mistake to do what everyone else is doing.” is pretty good too.

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Responses

  1. I wouldn’t have seen this otherwise, so I appreciate the post, especially the part about showing up some place and being able to meet the President– I’ve had a similar thought myself.

    There’s just something fundamentally different about people that do go to Africa, and those like zerohedge that stay at home to trade on the bond market. Some people aren’t cut out for the risk, or more specifically are adept at handling foreign situations, dealing with people of different backgrounds, relying on transacting with people without any legal guarantees, insurance, or other support. Some people think that is reckless, some other people think its exciting.

  2. Yeah, I agree. But I think the world has changed or is changing in a way that it isnt certain that doing business/investing in Africa is riskier than staying put in the developed world. Wrote a bit along those lines here: https://hotelivory.wordpress.com/2011/08/21/fragility-and-robustness/


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