It's interesting that taxes can turn a patriot into an emigrant. That's probably the best thing about taxes. If they are too high, wealth creators leave and end up doing better elsewhere. Who knows how many jobs Nicholas Sarkozy will create or save with his fund?
If you're feeling inspired by the global exodus from taxation nations, why not check out our report on the very same issue from an Australian perspective.
But reacting to outside forces like taxes is only half of what investing is about. What about inside forces - the ones you personally experience which are unique to you? Things like your risk appetite, how much cash you'll need for retirement, what kind of investments you feel comfortable with, and much more. How should those affect your investment strategies?
Did you hear about the Tunisian Imam who called his granddaughter 'Jihad'? That's not the beginning of a joke. And this photo of Jewish leaders hugging Iranian President Mr Ahmadinejad isn't photo-shopped.
Ahmadinejad Greeted by Jewish Leaders in New York
What's going on here?
Well, it's time for investors to go on their very own Jihad so that they can avoid the financial market's Zionism. Just to be clear, we're not making any religious references. Instead, there's something specific about those two powerful words that can make you a better investor.
Namely, the idea that when it comes to making investment decisions, your own personal needs are more important than the misleading investment environment around you. That might seem like a stretch considering the meaning of Jihad and Zionism, but bear with us.
The name Jihad used to be quite common in the Muslim world for boys and girls. The small time peaceful Imam mentioned above believed in the original meaning of the word 'Jihad' when he named his granddaughter.
It used to mean an internal struggle to be pious. In other words, it was an internal war in your own mind against greed, lust, jealousy and the rest of the vices. But that meaning has been lost.
A bunch of nutters came along and stole the word. They used it to drum up support for terrorism. You know the rest.
The Imam, worried about his religion, and his granddaughter, decided to preach about this issue. He explained to his small band of followers what Jihad really meant, and why the new definition of violence and terrorism contradicts the true one.
That got him into trouble with the Tunisian intelligence agency. He was regularly interrogated and asked why he was preaching Jihad. The Tunisian government was of course acting under orders from the Americans. And the Americans didn't care about the true meaning of the word.
Investing, just like the true Jihad, is an internal struggle. It's about avoiding the temptation of betting too much on risky punts, or having the discipline to stick with your stop losses. And just like Jihad, most of the investment world has completely lost sight of this fact.
They think investment is about taking a punt on the latest hot stock, or reacting to quantitative easing announcements. But it's not. It's about finding assets that suit your personal needs. And because everyone is different, investing is an internal struggle.
The obvious example of this is age. As you get older, you should have less risky investments. That way, if there is a downturn in the market during your retirement, it won't wipe out your wealth at a time when you rely on it for daily expenses. Meanwhile, a younger person can afford to take a hit on their savings, as long as they are compensated in higher returns over the long run.
The next time you make an investment decision, think about your needs and preferences, not just what the outside world is up to. Does the stock tip really complement you as a person with your needs and desires? You won't find the answer in an analyst's report or on the news.
Harder Than It Looks
So what about the Iranian President and his new Jewish buddies in New York? Isn't Mr Ahmadinejad supposed to be in favour of killing Jews? Didn't he support 'wiping them off the map'? Why is he hugging them?
Before we explain, a quick definition. 'Zionism' is the idea of a Jewish state. If you are a Zionist, you are in favour of a Jewish state. Now ignore your opinion of Zionism and Iran and consider this a test of your powers of scepticism. How easy is it to mislead pretty much everyone about emotionally charged subjects like religion and investing?
Most people think of Mr Ahmadinejad as a raving loony. He probably is. But raving loonies are easy to discredit. For example, the raving loonies who predicted the financial crisis were considered raving loonies for predicting a financial crisis. They were considered dangerous by financial market regulators.
So let's look at Mr Ahmadinejad's actual beliefs and statements. Does he really want to kill Jews like everyone believes?
The tens of thousands of Jews in Iran with their Synagogues and schools don't seem to think so. And neither do the Jews he was hugging in the video. In fact, in that video, Mr Ahmadinejad receives an award from several Jewish leaders. It's a giant silvery cup with the following inscription:
'May this gift be a token of gratitude for the sweetness and love you have extended to Jews and all mankind.'
You what!? Does that sound like an award for an anti-Semitic world leader that Jews would give?
Here's the explanation, provided by one of the Jewish leaders:
'The president is, of the world leaders, who is exemplary in his comprehension and understanding totally the difference between Judaism -- the spirituality, the religion, the servitude and subservience to god -- and the antithetical concept of Zionism, which is a materialism godless in its essence and a goal just for nationalism, which is something forbidden clearly and by the Torah.'
In other words, Ahmadinejad understands the difference between Judaism and Zionism. He doesn't have a problem with Judaisim (apparently), but does have a problem with the state of Israel. And many Jews feel the same way.
It's a video well worth watching. For all we know, this was a publicity stunt for Ahmadinejad or some breakaway group of Jews. But it's still interesting to think about how a well known truth can be turned on its head.
Scepticism Pays Off
The meaning of Jihad and the opinions of Mr Ahmadinejad will probably never have an effect on you. But they show that a good dose of scepticism is likely to get you closer to the truth, even if you were originally correct. The same applies to the investment world and its investment truths.
Those truths include 'house prices always go up', 'buy and hold shares', 'gold is a barbarous relic', 'banks won't fail', and many more. Most people rely on these truths for their financial future.
If you managed to set aside your pre-conceived notions of Jihad, Ahmadinejad and the Middle East's issues without getting offended by this article, try and do the same thing for your preconceived notions of investing. Are you relying on assumptions that could be proven wrong?
For example, could Australia suffer a sovereign debt crisis Europe style?
It sounds absurd, but it did not so long ago for many European countries too. Then they had to deal with falling house prices, banks that needed bailouts and before we knew it, the governments were in trouble.
People who question their own beliefs make better investors because they come prepared. But it isn't easy!
Until next week,
The Daily Reckoning Weekend Edition