Investment reward should be a function of speculation risk. The investor's goal should be to have a reward that is a multiple of his risk.

Breakeven ROI For Startup Companies

If an angel investor is considering financing a local startup company, he needs a sevenfold Return on Investment (ROI) to breakeven. The simple reason is U.S. Small Business Administration will tell anyone that only 15% of startup local companies succeed.

Thus, 7 X 15 = 105%, just over breakeven point for his original investment. In my way of looking at investment, those are dreadful odds.

If a venture capitalist is considering financing a high tech startup company, he needs one hundredfold Return on Investment to breakeven. Only one High Tech startup company in one hundred makes money. Those odds are far worse.

Yet in past five years, hundreds of billions of investment dollars have been washed away investing in such companies. And it's not only been funds of Venture Capitalists, but additional billions of small capital investors who then bought into media and stock hype of these useless, non-productive companies when they went public.

Breakeven ROI for Investors Playing OTCBB Market

Over 98% of OTCBB companies fail within five years. If you are a small capital investor and invest in one of these public companies, you need to eventually sell your shares for forty nine times what you paid for them to breakeven.

If you are a conservative investor and realize that inflation must eventually destroy U.S. Dollar and thus you invest in Junior Resource Companies (mining, natural gas, minerals) trading in US or Canada, you need to eventually sell your shares for two thousand times what you paid for them to breakeven. Here's why.

A Winning/Losing Investment

The success rate of mining exploration companies is about one in every two thousand. Among best performing mining exploration stocks of 1990s was Bre-X. Adjusted for splits, it climbed to US$240/share. Had you paid less than ten cents a share for this stock, it would have been a breakeven or potentially profitable investment.

However, no matter what you paid, an investment in Bre-X proved to be a losing investment, because company was a clever stock swindle. The conclusion is that anyone who invested in Bre-X shares for more than ten cents was making a losing bet.

Do As They Do

As a wise old British Investment Advisor, Harry Hone, observed to me in 1980: If US Dollar and British Pound are about to become worthless, why are all hard currency gurus so anxious to take paper currency for their invaluable gold? His point was simple. Do what people do, not what they say. And, I've learned over years that fads and promotions are never good investments. They can be good speculations IF you enjoy speculating and can afford losses. There will be many of them.

Inflation and Taxes Are Factors

Internationalism is Anti-American.

Surveys have shown that geographic ignorance among educated adult Americans is so widespread that many Americans are unaware of existence of most of countries of world. As a total population, Americans are, quite possibly, most insular of all developed nations.

The three thousand or so American multinational corporations are a monument to knowledge and reason over culture. Any proposal with a global vision isn't an American proposal.

Why Globalize?

The reason to globalize is that you can choose best business tools to create almost anything in Global Village. Business tools can be found in every country in World. The opportunities to apply these business tools exist everywhere. The quality and variety of business tools vary by country. The ability to use specific tools is a function of knowledge and ability of tool user. Thus, in Global Village no strategy is American, British, Russian or Chinese. International Business seeks to use best possible business tools to create successful multinational corporations.

I know that it's often difficult to change our thinking. We tend to continue doing things "the way they've always been done." We tend to lose sight of fact that other countries and other cultures have also found good methods of doing business, in those specific cultures. And often only way to be successful in doing business in such cultures is to adapt our way of thinking to that of our Global Targets. So don't "think American" or "think British" or "think Asia" when planning to expand. "Think Global."

Sample Tools

There are many ways to do business in Global Village. You can control taxation, ensure payments in a liquid currency or adjust individual or corporate citizenship. You can better manage corruption and bribery issues as a multinational corporation rather than a local domestic corporation. As a multinational corporation you can reverse role of government and have government finance your corporate growth rather than having your company finance government.

The Money Tool