Karim Rahemtulla, one of the country’s foremost specialists in options trading and co-founder and Investment Director of Mt. Vernon Research, talks with the Opportunist’s Managing Editor Leslie Stone about his passion for his work with emerging markets and his new book.
Karim Rahemtulla has covered international markets and the global movements of money for more than two decades. “My main goal is to open people’s eyes to options and emerging markets,” he says. “That [type of investing] was once opened to professionals only. There is a lot of opportunity there.”
His book, Where in the World Should I Invest: An Insider’s Guide to Making Money around the Globe (Wiley, 2012, part of the Agora series), published earlier this year, is already a bestseller, having hit No.1 on Amazon’s hot new releases list.
Opportunist: Tell us about some of your recent investment expeditions.
Karim: Last year I was in Vietnam. Their market went down 70% over the last three years, but business on the ground was really humming. We came back and recommended Vietnam, and it was the top performing market last year.
After Egypt had the coup and revolution in January and February of last year, I flew to Egypt in March to find out what was going on. North Africa has been a very key player in the world and this was the first major coup in 30 years, so it was a significant event. I met with the head of the Egyptian stock exchange, which hadn’t reopened yet, as well as the people who ran the largest conglomerates. I was still there for the opening but I didn’t recommend Egypt because what I saw on the ground was worse than what was reported in the news.
Opportunist: How so?
Karim: The reason they didn’t open the stock exchange after being closed for several weeks was because they were afraid that if they didn’t open they would be excluded from the Morgan Stanley Index. What usually happens after a revolution of this magnitude is people who come into power are worse because of grudges, etc. I went against the grain because of what I saw on the ground.
Opportunist: How do you determine which emerging markets are good risks and which aren’t?
Karim: It’s critical to get to know the people on the ground there, and establish contacts there and teach people to trade emerging market stocks.
Opportunist: How are emerging markets different from other types of investments?
Karim: They are actually trading vehicles, not buy and hold. You buy when there’s a coup or major event, for example, and when you have sell-offs they tend to be more pronounced. The same occurs on the upswing. Emerging market stocks rocket much higher.
Karim: After I received my master’s at the Rollins College Crummer Graduate School of Business, I became involved in the brokerage industry. One contact there told me about a research director position with Agora Inc., which is the largest privately held publishing company in the world. I took over that position and got my start at Taipan newsletter, which focused on emerging markets. I ran that newsletter for about four years and established a network of contacts all over the world. This was in 1992, when emerging markets were very emerging. I visited China, Indonesia, Malaysia, Turkey and Chile. Then I left that position and took over as investment director of The Oxford Club [financial publisher] and spent time doing that while I continued researching and talking about emerging markets as well as markets in the United States. I eventually branched off and started my own newsletter, Accelerated Profits Report. My focus here at Mt. Vernon is mainly on options.
Opportunist: Who is the most impressive person you’ve met during your career?
Karim: The person who wrote the foreword for my book: Bill Bonner. He owned Agora Inc., and he is by far the individual I have the most respect for—not just because he’s some great investor or a great person who has done so many things, but because he allowed people he hired to write their own ticket and he wasn’t afraid of failure. He allowed people to fail before they succeeded. His philosophy was: come join us—if you’re lucky—and follow your dream. There is nothing better in life than being able to do what you love and want to do as opposed to what you have to do.
Opportunist: Which of your business accomplishments are you most proud?
Karim: The amount of education I am able to give readers about options and emerging markets. I have opened up their eyes and made them money and made them confident in investing in alternative investment classes, where people have the most need for education.
Opportunist: What inspired you to write your book?
Karim: Emerging markets and options are two areas of investing that are not covered very well. Options, for the most part, are very technical and writing a book on options was pretty boring [Laughs], so I decided to write a book on emerging markets. I wanted to teach people about them because they don’t understand all the strategies involved. Buying options is usually the most expensive and easiest way to lose money.
Opportunist: How long did it take you to write your book?
Karim: Twenty years. [Laughs] Physically, though, it took about seven months to write it. This is my third book. The first one I wrote was in college and the second one came out about 15 years ago. This is my first book written for mass publication.
Opportunist: Why should people read your book?
Karim: People have a deep fear and misunderstanding of emerging markets. My book provides a guide and roadmap based on my travel and research. It’s Anthony Bourdain meets Wall Street, and it’s actually pretty irreverent and pretty humorous. I give readers tips, from my experience on the ground, on how to make the trip more comfortable, how to travel there, where to stay and where to eat. It’s an easy read.
It has been well received, but now it’s on its downward slope. [Laughs] The book is meant to be an introduction for people who’ve never invested overseas in global markets. It provides a lot of specific recommendations about when to buy emerging markets and when not to and which markets to avoid. It’s not a one-sided look, because there are a bunch of markets you don’t want to touch with a 10-foot pole. You won’t hear about that in the general media.
Opportunist: Are any book-signings in the works?
Karim: Yes, in March we had a signing in California at a place called the Grand Del Mar, and one is coming up in Las Vegas in July. We also have appearances in Washington, D.C., in June, and Park City, Utah, in July. Vancouver is planned for this summer as well.
Opportunist: What are your thoughts on the U.S. economy?
Karim: I believe it will plug along at the current level. There is less consumer confidence than if the economy were growing at a higher rate. Americans have been held hostage to entitlement spending and government spending, which is causing problems right down the line. It accounts for 60 cents out of every dollar right now, compared with 40 years ago when it was 17 cents. Opportunities are few and far between for the masses. Opportunities are heading overseas. The stock market is more for professionals now, which doesn’t bode well for the future unless we have significant reform in government and entitlement spending.
Opportunist: Where do you see yourself in five years Karim?
Karim: Doing exactly what I’m doing now. I have the best job in the world. I get paid to travel around the world and look for opportunities for investing. There are very few things I’d like to do more than that. I try to follow my dream every day.
Leslie Stone is an award-winning writer/editor with more than two decades of experience covering business, finance and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides in the Orlando area.