A Question on Sovereign Wealth Funds

Todd, America has been pushing Free market capitalism since 1776. The US became a superpower because of it. Now that foreign investors have learned the rules of the game they are now going to level out the playing field. The purchase of Citi or Merill is just a first order consequence of this free market capitalism we have embraced for so long. Citi and Merril and who ever else screwed up. You cant deny that. The SWF are now scooping up these valueplays because they need transfusions to stay alive. They are doing the same thing any value investor does.

To answer your question, there is no great difference. The only difference is that it affects individual investors on a more superficial level. I.e. it affects the dilution of shares in the future because the outstanding shares will be diluted through common or more senior securities in the future. are going to cost the investors who remain invested.
There is a lot of bitterness because of investors that sat on Citi at $60 and saw it drop to $25 are looking for someone to blame. They are upset that the SWF have now got in at what 30$?(I believe that the deal was convertable issues somewhere around a strike price of 30 in X amount of years.) Individual American investors recognize this and quite frankly I would be a bit upset also.

What people don’t understand is the second and third order consequences of the larger generation of global wealth. Mr. Blankfein has recognized this generation of wealth in the emerging markets thats why he is leading Goldman Sachs to a more global positioning. Companies such as IBM, Cisco and Walmart are well on their way to adapting a similar scope too. Even Warren Buffet recognizes the wealth being generated abroad. And if he sees it then well it must be happening.

American Auto workers have flat out tried to compete in the free market world. They cant do it. Computer programmers are quickly learning the same thing so it seems logical to me that American investors must have a much more global sense. They will be competing with more and more workers at a more global level. If you dont adapt to conditions you will die.

I dont know how close you are to retirement but I’m 23. I have a long way. I’m may just see Chinese take over as the world leader in wealth. I look at the possibility for a more global free market and see nothing but a gold mine. I see a global opportunity happening and US investors can either start playing the same game harder than they have before or they can isolate themselves and go into a protectionist mode. Personally, I think the Goldman Sachs and the IBMs have it right and are taking their good names in their respective industries and are going abroad and making money off of it. They have the business models, the experience and an ever growing group of potential customers why cant they just make money off of that.Personally, I have wet dreams about the prospect Walmart going to China and and profiting from 1 billion consumers. As a Free market capitalist what else could you want?

Didn’t think of that but thats very very good possibility.