IT'S NOT LAWS OR regulations that ensure a product is of good quality, but the self-interest of a profit-seeking businessman looking out for his most important asset -- his reputation.

For all businesses, reputation is the most valuable asset. "Reputation," wrote Alan Greenspan in the 1960s, "is a major competitive tool. It requires years of consistently excellent performance to acquire a reputation and to establish it as a financial asset. Thus the incentive to scrupulous performance operates on all levels. It is a built-in safeguard of a free-enterprise system."

This notion was enthusiastically backed this week by legendary singer Neil Diamond. Monday night in Columbus, Ohio, Diamond was suffering from laryngitis and put on, by his own account, a terrible concert. Diamond subsequently begged disappointed concertgoers to "forgive him" and offered full refunds. More than 11,000 had paid up to $120 a seat.

It is virtually unheard of for a performer to play a complete concert, only to then apologize and offer fans a refund because of the quality of the show. Yet Diamond has proven himself a shrewd businessman, earning $35 million in 2006 according to Forbes.

His gesture belies the popular stereotype of the "greedy CEO." The "greedy" businessman would have simply kept the money after a bad show. After all, the money-hungry CEO is supposedly only out for the quick buck, unconcerned about longer-term consequences. It's a smear used against executives of fast-food, energy and pharmaceutical companies all the time.

Diamond understands that it's in his own self-interest to ensure concertgoers don't feel ripped off. The thousands of dollars in lost ticket sales is nothing compared to the potential fallout from thousands of upset fans spreading the word. He can't afford to have 11,000 people yapping on Facebook about how Neil Diamond played a terrible show, so he takes the short-term hit to the pocketbook in order to protect the long-term and ultimately even more profitable audience relationship. Big, successful companies do this all the time, and we all benefit from their efforts.

Bravo to Neil Diamond. Not only has he proven himself a savvy businessman, but a real class act. Not surprisingly, those two qualities tend to go hand-in-hand.

Cloudy Future for Middle East Funds

I always used to joke that, while I rarely travel, my money has been all over the world. Indeed, when I began aggressively investing overseas more than six years ago, the vast majority of products now available simply didn't exist. If you wanted foreign stocks -- and virtually nobody did -- you essentially bought widely diversified foreign stock mutual funds. Country-specific funds, beyond Japan, weren't widespread either.

Obviously, that environment has dramatically changed, with financial innovations such as ETFs or ETNs having made investing internationally, even in remote regions, as easy as buying General Electric. For many years, that strategy worked. Yet in recent months, many of the most exotic locales have become the worst-performing markets. China, for example, is down more than 50% this year, with many of its larger stocks like China Mobile and China Unicom near new multimonth lows.

Most recently launched has been a slew of Middle Eastern and Gulf-states ETFs that invest in stocks in Kuwait, Bahrain and the United Arab Emirates. So far, I'm unimpressed. The products themselves are fine, but judging from their recent weak price action, it's their underlying constituents I'd avoid. All are underperforming both the Dow and S&P 500 in recent weeks.

Goin' Down in the Gulf

DJI vs. GULF, PMNA, MES, GAF -- 2 months

By and large, the largest sector represented in these funds is the financials, which have obviously been battered world-wide. Yet even in more prosperous times, the religious limitations put on many of these institutions would give me pause. How prosperous can a bank become when it is explicitly prohibited from charging interest? If it's an exotic financial you're looking for right now, I'd sooner buy Japanese banks like Mitsubishi UFJ Financial or Mizuho Financial Group than Kuwait Finance House or Arab Bank PLC.

Middle East / African ETFs	% of Assets in Financials
	0.30
	0.21
	0.60
	0.52

Source: Fund websites

Beware Calls of Duty

Leave it to both Barack Obama and John McCain to make self-sacrifice, otherwise known as altruism, appealing. Not a day goes by that both men don't stress their belief that sacrifice is an integral part of the American ideal.

"I believe that patriotism must, if it is to mean anything, involve the willingness to sacrifice -- to give up something we value on behalf of a larger cause," Obama told a rally in Missouri earlier this summer. Not to be outdone, John McCain has proudly stated that "To sacrifice for a cause greater than yourself, and to sacrifice your life to the eminence of that cause, is the noblest activity of all." This is a common theme of both campaigns.

A contrasting perspective on sacrifice, one I happen to believe is fundamentally more American, can be found in Ayn Rand. "It stands to reason that where there's sacrifice, there's someone collecting sacrificial offerings. Where there's service, there's someone being served. The man who speaks to you of sacrifice, speaks of slaves and masters. And intends to be the master."

Jonathan Hoenig is managing member at Capialistpig Hedge Fund LLC.

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