Friday, December 18, 2009

Relocalized Investments?

Today in the news I read about concerns that foreign investors may gain too much control over corporate domestic assets, such as a gold mine near some military facilities in Nevada.
I hope CalPERS staff are looking for the kind of investments in basic value that such investors are likely attuned to. My father, who did reasonably well with his investments, advocated buying stock in companies that made things people needed and wanted.
From an investment perspective, rates of return on investment in production of needs are low, because such industries are usually old and stable. On the other hand, rates of return on investment in production of wants tend to be higher, because of the growth in sales often seen with new toys and also the risk that this growth is likely to be unrealized or temporary.
But it should be obvious that any economy without businesses that are old and stable and producing basic needs at affordable prices - clean air and water, healthy food, and snug shelter - cannot be a healthy economy. And without a healthy economy, no pension fund can succeed in paying benefits without recourse to the taxpayers.

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