Sailing Along With a Weak Dollar


The key to successful investing is to find trends that put the wind behind your sails.

I was lucky 45 years ago to have an opportunity to move to Hong Kong to sell US mutual funds. That was exactly the wrong place and time to be… sailing into a harsh wind.   But the error and a great sailor put me in a unique position to see beyond the US dollar.

hk sailing

Photo of the Hong Kong Tommy Bahama Round the Island Race for the La Cigale Trophy.  The winner had the wind behind his sails!

Noel Croucher, an eccentric Hong Kong expat, loved to sail alone.  He loved to make money as well.  The Royal Hong Kong Yacht Club still honors his contribution as commodore and secret financier.  The La Cigale Trophy is named after his yacht La Cigale II.

I arrived in Hong Kong in 1968 to sell US mutual funds but this was just about the end of a great US market bull cycle.  The Dow was entering a 15 year bear.  However Hong Kong was about to explode upwards.

I might have missed this fact but was lucky that one of my clients was Noel Croucher.  He lived to be 88, but when I walked in his door on a cold call, in the 1970s I suspect he was somewhere in his 70s.

There is a book “Quest of Noel Croucher by Vaudine England” which tells his story.

croucher

Image from Amazon.com page offering the book “The Quest of Noel Croucher” by Vaudine England.

The book tells that Croucher was a man of many facets, some not very nice.  All I saw was his good side.  Perhaps he saw in me a similarity to his past, a young man just starting with nothing but a willingness to work.  Whatever the reason, Croucher was happy to provide me with many hours of his time.

I knew he was a founder of the Stock Exchange and had been in Hong Kong so long that he could remember the colony before WWI.  He was a wealth of legends and stories about the Colony and seemed willing to sit and talk for hours of the past.

He shared stories of Hong Kong and his being interred during the wars and how the stock exchange was formed.

Croucher had a very poor background. His mother brought the family looking for a fugitive husband. She became a single mother in a hard world.  He started working hotels and the post office but worked his way to become a stock broker and became a founder of the HK Stock Exchange.

His surroundings were humble so I had no idea that he was the richest white man east of Suez when he emerged from a Japanese prisoner of war camp in Hong Kong in 1945.

He was never fully accepted by the Hong Kong upper crust but he left a vast fortune in trust that helps fund education to this day via the Croucher Foundation and he left me with wonderful insights both into the HK Exchange and the colony’s history for which I am forever grateful.   Noel Croucher helped me see how times had changed and that I should be selling Hong Kong investments to Americans rather than American investments in Hong Kong!  Nothing could have been more brilliant.

I switched and have never looked back.  Statistics support that this was a good decision.

dji

Dow Jones Industrial Index 1970s to now

Had I invested in the Dow Jones Industrial Index in 1970 and left the investment there… it would have done very well… rising from 973 to over 15,000… an appreciation of 873%.  That is an increase of about 15 times.

However when the Hong Kong Stock market’s Hang Seng Index was first published, its base was 100 points.

heng Seng

Heng Seng Index 1970s to now.

The Heng Seng Index rose from 100 to 30,000 and now is around 23,000. That’s an increase of 230 times.

I am not sure it would have been possible to invest just in the indexes at that time.    However one fact is clear. Anyone who invested long term in something as simple as the Dow Jones Industrial Index for the past 45 years has certainly had the wind behind their back.

Those who invested in emerging markets, like Hong Kong, during the same time had a much stronger wind.

During this weekend’s course in the Blue Ridge, I will expound on Croucher and Sailing Along with a Weak Dollar.  After all, I am still grateful and look forward to sharing more wisdom from Noel Croucher.

Gary

We’ll look at where the economic winds may be blowing for the next six months at our International Investing Seminar this weekend. Due to a larger than normal attendance we became overbooked so have moved to a larger meeting room and still have space.


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