Growing Rich - Arabictrader.com

KIRK KAZANJIAN
return businesses and are being run under a new form of management
called EVA, which stands for Economic Value Added. Under EVA,
you try to raise returns on capital and equity. This concept is sweeping
around the world, along with shareholder capitalism. Furthermore,
companies are trying to grow business and the bottom line without
raising prices. America has become leaner and more efficient, and
that’s a huge plus for stockholders. And Japan, which used to be our
major competitor, is now much weaker and not nearly as influential.”
As a result, Davis also looks to fill his portfolios with companies
boasting successful international operations. He believes corporations
that expand overseas reduce the risk of being tied too closely to our
economic and business cycles in the United States. He is further
convinced that such companies merit higher valuations in the market.
“They deserve a premium, especially the bigger companies, because
they have staying power combined with global opportunities that
didn’t exist in the early 1970s,” he insists. “Capitalism and free enterprise
have won out over socialism. Just look at Procter & Gamble. It
might have been a mature company if it were selling just to Western
Europe and the United States. But now it can move into Eastern
Europe, Russia, China, and South America. That’s also true of Coke,
McDonald’s, Colgate, and a bunch of other consumer products companies.
It further applies to Hewlett-Packard, IBM, Intel, and many
more technology companies.”
THE ONE EXCEPTION TO THE “BUY-AMERICAN”
RULE
There is one exception to Papp’s America-only rule. He’ll buy a
stock directly overseas if he can’t legally exploit the opportunity some
other way in the United States. “Let’s say you were convinced diamonds
were going through the roof,” he offers. “You’d buy DeBeers
in South Africa because that’s the only real option you have. It’s not
an American company, so you must purchase it abroad. Overall, there
are very few occasions where you get a benefit from buying into a
developed market abroad. In most instances, you can find a pretty
darn good substitute in the United States that’s going to perform
better for you over a long period of time. You’re not going to find
the French, German, or Japanese economy growing a lot faster than
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