Buying at the Point of Maximum Pessimism: Six Value Investing Trends from China to Oil to Agriculture, Safari

The world's savviest investors are those who can recognize when the herd is running headlong in the wrong direction and can take advantage of their fear and confusion. That's never been truer than it is right now. Now, there's a book that will show you how to earn the same outside returns these savvy value investors do. Buying at the Point of Maximum Pessimism will help you uncover enormous value opportunities that keep on emerging even as the economic crisis keeps spreading. Lauren Templeton Capital Management principal D. Scott Phillips, Jr., co-author of the best-seller Investing the Templeton Way, has systematically updated the proven techniques of value investing for today's radically new markets. Phillips carefully identifies crucial changes underway in the financial system and investing landscape, and offers investing solutions that respond to today's crucial new risks. You'll learn how to invest in markets facing an increased government role and lower access to capital; manage growing risk of inflation spikes; scavenge for profits in distressed sectors; find winning opportunities overseas; and much more. Every market offers opportunity to those who can find value where others aren't looking. Today, there's no more important investing skill and Buying at the Point of Maximum Pessimism is the one book that will teach it to you.

Foreword . . . xiii

Acknowledgments . . . xv

About the Author . . . xvi

Introduction . . . 1

Chapter 1: The Fed Sentences the Consumer to Debtor’s Prison . . .7

An Economic Recovery Built on Borrowed Money . . . 8

The Fed’s Potion of Low Rates and Rising Home Prices Becomes an Economic Elixir . . . 14

A Chicken in Every Pot? Try a Hummer in Every Garage. . . 15

The Three Cs of Credit Give Way to Financial Innovation . . . 19

Chapter 2: The Biggest Gamblers Go “All In” on the Housing Bet . . .35

Trouble in Paradise . . . 37

The Canary Died Unheard from the Boardrooms, Yachts, and Golf Courses . . . 39

The Credit Bubble Draws in Every Last Bull . . . 46

Chapter 3: Financial Chaos . . . 53

The Crisis Moves from Subprime to Prime Time . . . 61

Chapter 4: Quis Custodiet Ipsos Custodes? . . . 71

An Alphabet Soup of Rescue Acronyms Will Save Us. . . 72

Strategy Number Two: Spend Our Way Out of a Spending Problem . . . 75

The Vestigial Effects of the Crisis Come into Focus . . . 79

The Visible Hand Is Coming into View, and It’s All Thumbs . . . 92

Chapter 5: A New Landscape for Investors . . . 101

Entrepreneurialism Is Thriving in Many Key Emerging Markets. . . . 105

Crisis Is an Opportunity for Those in a Position to Seize the Opportunity. . . 111

The New Landscape . . . 113

Chapter 6: China: Ready for Prime Time . . . 117

A Culture Well Suited for Capitalism. . . 119

Putting Those Rainy-Day Savings to Work in the Worst Storm of the Past Century . . . 122

Urbanization Is the Growth Engine . . . 126

The Path Toward Consumerism and the Domestic Economy. . . 128

Prime-Time Products . . . 135

Chapter 7: Proteins and Agribusiness: Billions and Billions to Be Served . . .141

Where’s the Beef (and Chicken and Pork, Too)? . . . 142

Eating Good in the Global Neighborhood . . . 146

Brazil Has the Competitive Advantages in Agribusiness. . . 152

Strong Fundamentals Across the Value Chain. . .161

Chapter 8: Formula for Success: Rise Early, Work Hard, Strike Oil . . .165

In the Long Term, Healthy Demand Meets Higher Cost Supply. . . 170

Market Distortions from the Fed’s Loose Credit and Easy Money . . . 179

Seeking Alternatives in the Hydrocarbon Space. . . 191

Chapter 9: An All-Too-Common Tragedy . . . 201

Human Behavior Is Timeless . . . 202

Strong Demand Underscores the Overexploitation . . . 206

A Tragedy Leads to an Opportunity . . . 210

Chapter 10: What Happens When 700 Million Students Want Extra Help?. . .217

Spending on Education Takes Precedence in Many Emerging-Market Households. . . 220

The Role of Technology and Innovation . . . 223

10 Million Students Applying for 6 Million Spots in College–No Pressure . . . 225

Continuing Education. . . 227

Financial Crisis Portends Continued Growth in the Emerging-Market Education Services. . . 230

Education Plays and Their Fundamental Dynamics . . . 234

Chapter 11: A Rare Opportunity . . . 241

Demand for Global Technology Remains Strong. . . 242

It’s Not Easy Being Green . . . 245

There Is Oil in the Middle East; There Are Rare Earths in China. . . 249

Index . . . 257