Today I will take a break from our visit to Asia to bring you another incredible investment destination.
While Asia has the maximum potential for rising investment value during the next decade, there are pockets of excellence around the world.
I live in Anchorage, Alaska, with my beautiful wife and two incredible daughters. The past weekend was spent catering for a dozen young girls. My youngest daughter turned 10 and she invited friends from her fifth-grade class and neighborhood friends for her birthday party.
For her birthday gift, she asked if we could move to Norway.
Incredulously, I asked for her reasoning.
She reminded me of my conversation with my wife several weeks ago about Norway and how the citizens of Norway have their future secured.
While I am fascinated and proud that my young daughter remembers such a conversation, I am also reminded of the strength of Norway.
Norway is the only country I know that has fully paid the value of the pensions due not only to their citizens, but also for the unborn future citizens of Norway. And all of this while there are rumblings of how Social Security in America may disappear once it runs out of money.
Norway and Alaska have many things in common:
• Both are heavily dependent on the oil and gas sector for a large part of their income.
• Both have a Permanent Pension Fund from which they pay dividends to their citizens and residents each year.
• Both are heavily dependent on the state to spend large amounts to keep the economy humming.
• Both have low unemployment rates and belong to a cold tundra region of the world.
• The cost of living is high in both places. (A pack of cigarettes costs nearly $28 in Norway. A bag of wheat flour costs about the same in Alaska).
There are also some differences.
Alaska has zero state income tax and sales tax. Norway, on the other hand, has a heavy value-added tax, or VAT, of 25 percent or so.
Norway has exceptional healthcare while Alaska’s healthcare is mired in mediocrity, to put it mildly.
But Norway has a great economy and has been achieving great results for the past many years.
About 45 percent of Norway's economy is based on heavy manufacturing (shipbuilding, food processing – seafood, pulp and paper products, timber, metals, chemicals, etc). About 53 percent of the economy is based on the service sector (oil and gas sector, hydroelectricity, telecommunication, banking, BPO – business process outsourcing, etc), employing 72 percent of the citizens.
Norway is a shining star of Europe. It has invested its trade surplus (a term that is lost in America) very wisely.
In fact, Norway’s government investment model is being sought after by many countries that are trying to replicate it for themselves.
Norway benefits directly from higher oil prices as well as high prices of energy.
Norway has been blessed with incredible hydroelectric-generation capabilities, which help it generate its trade surpluses.
The Norwegian krone is one of the stronger currencies and will continue to benefit from the sound and stable policies of Norges Bank (which has my respect for being independent and not swayed by politicians).
The core philosophy of Norges Bank (according to its website) is: “Our aim is price and financial stability, and to generate added value through investment management.”
While Norway is socialistic in its pursuits, it is efficiently run and managed.
There is a perpetual debate (by its citizens) on the role of the public sector. While most favor a mixed model of growth (socialism and capitalism), the right mix is very hard to achieve.
Norway is a great destination for investment dollars. A prudent investor should allocate some amount of sectorial investing in Norway.
The investor should also take on some level of foreign-currency risk in the krone, which is expected to outperform the general European currency markets while allowing prudent diversification from the U.S. dollar.
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