
The coercive power of government is more dangerous than the free market. Special interests use it to circumvent both the law and economics.
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Every year the Heritage Foundation evaluates all the world’s countries using their Index of Economic Freedom, where a high score correlates to nearly every positive measure of a country. In 2002, David John Marotta started following the returns of an investment portfolio based on economic freedom, which he later wrote about in Foreign Freedom Investing 2008. Now, he's concluded very definitely that freedom matters even in your investment portfolio.

The coercive power of government is more dangerous than the free market. Special interests use it to circumvent both the law and economics.
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David John Marotta was interviewed recently on radio 1070′s WINA Schilling Show discussing property rights and their importance for a free society.
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“Until the deficit is eliminated from our budget, … there is no end to inflation; there is finally no end to taxation; and the eventual result would, of course, be catastrophe.”
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Property rights are among the characteristics most correlated with high levels of per capita gross domestic product (GDP).
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Does a property owner has the right to use and dispose of his property as he sees fit even if that means he is being irrational, arbitrary, capricious, even unjust?
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Follow-up information for 2013 AAII presentation “Dynamic Portfolio Construction in the Context of Comprehensive Wealth Management.”
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“Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow, and the dollar would inevitably decline.”
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MarketWatch is seeking a top-notch writer who will bring a fresh perspective on money to the world’s investors. We believe that fresh perspective ought to include the idea of freedom investing.
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Sometimes the medium term trend seems to weigh more heavily in our minds than the long or short term trends.
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Countries are constantly in flux, and with all the noise of the markets, it is easy for the noise drown out the signal.
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How the five countries with the most economic freedom (Hong Kong, Singapore, Australia, Switzerland and Canada) and Emerging Markets have been faring in comparison to the EAFE Index?
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Freedom scores ranged from #1 in freedom Hong Kong at 89.9 to #92 ranked mostly unfree Italy at 58.8.
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Over the past five years, countries with the most economic freedom averaged annual returns just below emerging markets.
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Sovereign debt and deficit weigh most heavily on a country’s level of government spending, one of the ten components of freedom in the Heritage Foundation economic freedom study
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We believe this is one of the times when your asset allocation should tilt foreign and overweight the handful of countries with high economic freedom.
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New Zealand, the fourth highest country in economic freedom, joined the United States with positive returns for 2011.
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The equation of the trend line shows that every point on the freedom index was worth 0.36% annual return over the past year.
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Now at year end, I will review how freedom investing fared in 2011 and in the decade since 2002.
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The world markets groaned as the burden of the rising American debt and the European deficit weighed down more productive countries.
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Q: I have put my investments in bonds until this global economic crisis settles down and the economic woes of the European Union subside. Do you have any suggestions for indicators that I should look for to get back in?
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This is what makes the stock market in some countries better than others. Make sure that you understand freedom investing for your portfolio.
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Growing investor despair that somehow we have entered into a new era in which individual investors can no longer make money in the markets is an overreaction to the headlines.
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Libertarians and economists both recognize that countries with more economic freedom experience higher gross domestic product (GDP) growth. That growth translates into higher stock returns for investors savvy enough to look for governmental fiscal restraint rather than government stimulus.
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Given the dangers of worldwide sovereign debt, this may be one time when investors should continue to tilt foreign and toward specific countries.
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The legendary PBS TV series “Free to Choose” (1980) by Nobel Prize-winning economist Milton Friedman is now available on Google Video for free (by courtesy of the Palmer R. Chitester Fund).
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International bonds now make up more than 35% of the world’s investable assets, and yet many domestic investors have little or no exposure to these securities.
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Even in our gone-fishing portfolios we suggest investing more overseas than in the United States. For most investors, foreign stocks will be their largest and most important allocation. Including the right mix of foreign stocks will help you relax and go fishing no matter which foreign seas are in turmoil.
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Americans seem to be divided on the importance of raising the U.S. debt ceiling. Regardless of your personal politics, avoid investing in countries that cavalierly allow their debt and deficit to balloon.
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Finding countries where you can plant your investments in fertile soil may be one of the most important asset allocation decisions you make for the next several years.
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A few months ago Bill Gross, co-founder of PIMCO and the country’s most prominent bond expert, singled out those countries heaping significant deficits on their mountain of debt and called them “The Ring of Fire.” We recommend that you reduce your investments in these countries.
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You can both diversify for safety and boost your returns by adding international investments to your portfolio. In the past year, international stocks performed 2.5% better than U.S. stocks. And developed countries with the most economic freedom returned an additional 4.4% more than the international index.
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Can anyone recall the last time a government bureaucracy declared that it had fulfilled its mission and now should be abolished?
— Michael D. Tanner
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