A few years ago> we wrote about Venezuelan President Hugo Chavez seizing privately held land and redistributing it for political gain. Did anybody think he would just stop there?
In subsequent years Chavez has all but eliminated private property rights in this once prosperous country. In addition to stealing acreage, he has taken control of major companies in metals, materials and energy, including food plants owned by U.S.-based Cargill earlier this year.
Just this week, Chavez seized the nation s two largest coffee-processing plants and revoked the broadcast license of 34 radio stations. Lawmakers are discussing a bill that would give out punishments for as-yet undetermined media crimes on broadcasters who publicly oppose Chavez s policies.
The net result of his socialist revolution has been a collapse in production coupled with widespread unemployment. Shortages of basic commodities are commonplace and inflation now rests north of 27%. This is in a country sitting on 7% of the world s proven oil reserves, more than Russia, Brazil, the U.S., Norway or Qatar, yet nearly 38% of the population lives below the poverty line.
Turns out a country s prosperity for all citizens has nothing to do with their natural resources, but their political philosophy. As demonstrated by the widely-followed Index of Economic Freedom, the most free and capitalist countries are always the most successful.
The United States isn t Venezuela yet. Because as our own country embarks on an effort to own and manage private industry devoid of the profit motive for the public good it s unlikely we ll achieve any better result than Hugo himself.
Forgotten Fund Has Upside Potential
Left off of this week s profile of world real estate plays was DWS RREEF World Real Estate & Tactical Strategies Fund (DRP),
Been Around the World
DWS PREEF World Real Estate & Tactical Strategies Fund Inc (NYSE) 1 year>
Its largest holding is the Link REIT, owner of $3.3 billion of Asian real estate, including 180 shopping malls and parking lots formally owned by the Hong Kong government. It s the first and largest REIT listed in Hong Kong, and one of the biggest property firms in the world. Seventy-five percent of the fund is made of up of non-US firms.
If you re interested in DRP you should be aware that it s poised to have a reverse stock split on Aug. 10. That means for every two shares you own today you will have one share after Aug 10. The price will look like it has doubled in value, but really, you ll still own the same percentage of common shares as you did before. Assuming the price doesn t change much between now and Aug. 10, instead of owning two shares of the fund with a value of about $7 each, you ll own one share with a value of about $14 after the reverse split.
New Silver Fund a Bargain
Competition is benefiting investors when it comes to precious metal ETFs, where European fund provider ETF Securities recently launched its first U.S. product ETF Silver Trust (SIVR),
Playboy s Price Cut
The housing slump has affected everybody, even Hugh Hefner. The Los Angeles Times reported Hefner, the founder of Playboy Enterprises (PLA)
Dollar Short an Easy Trade
PowerShares DB US Dollar Bearish Fund (UDN)
PowerShares DB US Dollar Bearish Fund (UDN) 2 year>