"Nowhere else can you find the legal, capital and talent creation systems that we have here," adds Lee.
His portfolios are broadly diversified, however. Lee's firm creates partnerships for its clients, and most portfolios have between a 25% and 35% commitment to hedge funds. The portfolios typically have a 5% to 10% investment in companies that build bridges, roads and other infrastructure worldwide and that offer a yield of about 8%, and the firm has a similar investment in energy and natural resource stocks as well as Treasury Inflation Protected Securities. "We're prepared to deal with this because we are never willing to bet a client's portfolio that we're right," says Lee.
Lee says he goes to a bookstore once a month, skims the introductions of five to ten books from the business section, and picks one or two to read. He also regularly reads the Financial Times, The Economist and The International Herald Tribune.
Robert Levitt puts his money where his mouth is. In fact, he's put his whole self there. Levitt moved to France last June and spends six months of the year traveling around the world scouting for investments. "We invest thematically in common sense ideas globally," Levitt says in an interview via Skype from his hotel room in Dubai. Levitt Capital Management is still headquartered in Boca Raton, Fla., but he is seeking to build on its $500 million of assets under management by luring clients who meet his $3 million minimum and live anywhere in the world. "It's difficult to be in the U.S.," he says. "You have an insulated business media and it's hard to travel because everything is so far."
Levitt says the U.S. is in a financial recession, which is different from a traditional recession caused by a buildup of inventories. The U.S. has low unemployment and low inflation, and the economy is not in poor condition, but it is not growing. In New York, he predicts, "people will feel like they are living through a depression. It could be years before the U.S. economy recovers," he says.
Levitt believes that even as a U.S. bear market has just begun, a global economic recovery is intact. "The world is coming alive and the lights are coming on across Asia," Levitt says. "Here in Dubai, skyscrapers are being built everywhere, the Saudis are building six new industrial cities, and we are seeing the biggest transfer of wealth in history." Levitt says that the $4 per gallon gas prices Americans now face are creating wealth elsewhere. "In Kiev, all you see are Porsches, Rolls-Royces and Bentleys," he says. "And they're not using it to invest in OECD (The Organization for Economic Cooperation and Development) this time, but to invest in their own economies. Opportunities to invest in everywhere but not the U.S. or OECD."
Levitt says financial stocks are likely to fall further. "No one knows what financial assets are worth," he says. He is bullish on commodities and dismisses the notion that they are vulnerable should developed-country economies fall into recession, believing that less developed nations will keep driving demand. "There are 500 million people in India alone who still don't have electricity," he says. He is most bullish on agricultural stocks and is invested in Brazilian, Russian, Norwegian and Israeli agribusiness as well as U.S. companies. In fact, the 8% of his assets invested in the U.S. are all in the agribusiness. Meanwhile, the intrinsic value of oil makes him bullish on the stock markets of members of the Gulf Cooperation Council. He believes GCC economies-Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and The United Arab Emirates-could be in the early stages of a secular bull market of the same magnitude as the U.S. bull market from 1982 to 2000.
Andrew Gluck, a longtime writer and journalist, is CEO of Advisor Products Inc. (www.advisorproducts.com), a Westbury, N.Y., marketing company serving 1,800 advisory firms.