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Your Vantage Point Matters

Sigma Investment Counselors

June 12, 2013

In order to enhance my grasp of global economic issues, I subscribe to a newsletter service called Stratfor. Many large corporations and government agencies are also subscribers because the company’s analysts are former military or intelligence personnel and their perspectives are often unique and valuable. I consider the owner of Stratfor, George Friedman, to be one of the world’s foremost experts on contemporary geo-political issues. He also one of the company’s primary analysts.

In a recent piece, Friedman wrote:

“A Chinese businessman once told me that he thought Americans were vile and immoral because they would hire strangers over family merely because the stranger was better qualified. He argued that valuing merit over blood was the height of immorality. I would not have liked to build my company on his basis, but his comments reminded me that our conviction as to how a society should function is neither universally shared nor admired.”

I found this statement almost incomprehensible because of my “baked in” and perhaps dangerous quantitative financial perspective. It cannot be dismissed though, just because conceptually it is so peculiar (wrong?). In fact, it is essential to incorporate such cultural artifacts into the analytics that go into the investment decision making process when considering foreign securities. The output of such analysis could be materially different when weighed with these factors in mind, versus otherwise.

The upshot – narrow thinking could lead to unexpected investment results, and not necessarily for the better.

All questions or comments are welcomed.

Bob Bilkie, CFA

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