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Lessons from a Road Warrior
01/01/2009 12:01 am EST
I first had the opportunity to listen to John Rutledge, chairman of Greenwich, Connecticut-based Rutledge Capital, at a Money Show event last year, where I was-at the same time-amazed and scared to death!
Listening to a brilliant intellect who explained his investment theory in terms of the laws of thermodynamics was incredibly intimidating at first. But Rutledge's delivery was so interesting, informative, and even, humorous, that I jumped at the chance to interview him last month for MoneyShow.com's Global Investing.
Consequently, when he sent me his latest book, I couldn't wait to read it. Now, I'll just warn you right up front, that this isn't a book for a quick scan. It won't give you fancy investing equations, offer complicated options strategies, or tell you why you should buy stocks in certain industries.
But what it does provide is a very interesting tutorial on deciphering how changes in economic and global policies can create pockets of opportunities for observant investors. And to make sure you are choosing the right investments, Rutledge discusses the most important company-endemic factors that separate the good from the bad, including growth, intrinsic value and risk, cash flow, and debt.
He introduces his book by citing some of the (often-humorous) life lessons he has learned from his world travels, applying them to building a successful long-term investment plan. Rutledge stresses the importance of asset allocation, then goes on to demonstrate pertinent examples of how changes in government policies can dramatically affect whether households wish to hold tangible assets vs. investments.
His basic premise is this: The laws of thermodynamics show that all change takes place away from equilibrium. Therefore, when government policies-such as dividend tax decreases, rising interest rates, legislative changes that affect certain industries-change, they often create a state of disequilibrium. And that open window may just offer exceptional opportunities for investing-either in tangible assets or in investments.
Rutledge discusses these potential changes and offers insight into current and upcoming 'storm systems', including the recent election, potential increasing tax rates and protectionism, a new energy direction, the subprime mortgage crisis, and US-China relations.
He also covers his thoughts on the current bailouts and stimulus programs. Rutledge wraps up the book with his upbeat views on the opportunities in China. As a visiting professor at the Chinese Academy of Sciences and chief advisor for finance and investment to the Governor of the Haidian District in Beijing, Rutledge spends a lot of time in China, and offers a bird's-eye-view of that country's challenges and potential.
In summary, I think investors who are looking for a little more in-depth knowledge of the triggers that create investment cycles will find this book of great interest.
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