In yet another example of why sanctions don't work, the Tehran Stock Exchange (TSE) is booming. In fact, the TSE just hit a record high, and it remains one of the most undervalued markets on Earth.
You know the deal...
Iran has been a supporter of terrorism for the past forty years. The current president is a rabble-rouser who plays to his most conservative Islamic base. He denies the holocaust, and threatens to destroy Israel on a regular basis.
He steals elections. His thugs in the militia beat and jail students who protested the sullied election. His judges sentence females accused of adultery to death by burying them up to the waist, and having their neighbors throw rocks at their heads.
Iran will have the bomb
On top of this, Iran is actively seeking the atomic bomb. And in a year or two they will have it. There is nothing to stop them from getting this weapon, just like there was nothing to stop India, Pakistan, North Korea or Israel. But that's not going to stop the powers that be from posturing like a guinea hen.
In fact, the U.S. believes Iran is such a threat that it has built up bases and carrier groups completely surrounding the country.
Chairman of the Joint Chiefs of Staff, Mike Mullen, said last week on "Meet the Press" that the Pentagon has plans for attacking Iran and that "military actions have been on the table and remain on the table."
CIA Director Leon Panetta, in late June, appeared on ABC's "This Week" and carefully hinted at covert war options against Iran's nuclear ambitions.
And the United Nations has written a strongly-worded letter and offered up a fourth round of sanctions on high-tech and military goods. Hillary Clinton gave away who-knows-what to get the Russians on board.
It is not working
Despite all the saber rattling and jawboning, Iran remains uncowed.
In fact, judging by the stock market, Iran is doing just fine. The Tehran Stock Exchange hit an all time high on Monday and is up more than 60% this year.
Furthermore, the TSE remains ridiculously undervalued.
The average price to earnings ratio is 5.5, and the average dividend yield is 15.8%. This is the average of 337 companies listed with a total market capitalization of $70 billion. The average.
That's incredibly cheap for the country that ranks third in the world in terms of petroleum and natural gas reserves.
In fact, the Tehran Stock Exchange's main index is up 27% since March 21 – about the time the saber rattling began.
This is because while the U.S. and Europe are trying to "put the pressure" on Iran, the leaders in the country are making it easier for foreigners to invest.
In fact, in the new sanctions there are no restrictions for foreign investors to invest in Iran. Capital gains taxes have been cut to zero. And as far as I can tell there are no restrictions on investing in Iran.
According to Reuters the sanctions are as follows:
The U.S. effectively deprived foreign banks of access to the U.S. financial system if they do business with key Iranian banks or Iran's elite Revolutionary Guards.
And EU measures set limits on the transfer of funds into Iran, requiring any transfer of over 40,000 euros to have prior government authorization.
Despite these sanctions Iran is taking a different course than America - Iran is trending toward capitalism. Iran will raise $12.5 billion this year by selling state firms, including two refineries. I forget how much Bush and Obama paid for GM, AIG, Freddie, Fannie, etc. Was it billions or trillions?
The truth is that Iran was the only country in the Middle East to hold candlelight vigils after 9/11. The vast majority of the country (two-thirds, or some 50 million people), is under the age of 30. They do not remember the Islamic revolution in the 1970s, nor do they care.
They want what we all want: peace, prosperity and freedom. And they will get it along with the bomb.
Despite what you may have heard, the atomic bomb has brought more peace for longer than any other item, thing or philosophy in history. In ancient Rome, the doors to the Temple of Janus were closed when Rome was at peace. They were closed on five occasions for a total of twelve years.
And as an aside, the Samurai sword killed far more people in WWII than the atomic bomb did. And the Roman short sword, or gladius, has killed more people than any weapon ever devised.
My point is that Pakistan and India used to go up 16,000 feet in the Hindu Kush and lob artillery shells at each other in the dead of winter. They were arguing over a boundary line in a piece of territory that no one could ever use or inhabit.
Since they both got the bomb all they do is strut at the border like chickens.
Don’t get me wrong, there are obvious political risks to investing in Iran. But right now there is tremendous upside. The more sanctions you put on the country the more they will pull their money back home. The political situation can’t be worse, so it will likely get better. They will find a Mikhail Gorbachev. Oil and gas will not get cheaper. No one can beat a diversified 15% dividend yield.
If I can find a way in I’m betting on Iran. I’m currently looking into ways to invest. I’m rounding up my contacts as we speak (if you know anyone who can buy Iranian stocks drop me a line).
The only way I know how to play it is indirectly by buying the Wisdom Tree Middle East ETF (NASDAQ: GULF), which I told you was a buy last week. GULF is far from a pure play however.
I’ll find a way sooner or later. And as I wait, I’ll be happy knowing my other frontier market, Mongolia, has given my readers 727% gains in six months. The best way to make the most money in stocks is to get there first with the most. I've done it in South Africa, Libya, and Mongolia. I’ll do it in Iran as well.
Keep in touch,
Christian DeHaemer
Energy & Capital
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Second, this country wants to see our country destroyed or fail in any way they can make happen.
Third, it is very close to treason to support this country because of their spoken and unspoken stance to ours.
Forth, What happens if in the near or distant future we are driven to war against this country? What happens to our investment in them then? Is it even legal at that point?
Last, The government of Iran is very corrupt and dictatorial and inhumane. It is not something a morally or ethically correct person should do...even if it means passing up profits. There is more to life than profit at the expense of repressed peoples.
Chris, I do believe this is a low one should not sink to.
Yesterday was the 65th anniversary of the bombing of Hiroshima.
What greedy, squeeky, avaricious little parasites would mark this occasion with such an outpouring of glee and simpleminded arguments about the current state of nuclear proliferation?
Well then, "Christian", I wish you good luck and much happiness in making lots and lots and lots of money, and may your heirs rejoice for their good fortune, on the day of your passing. Assuming of course that they are not incinerated by the same coincidence of thermonuclear fireballs.
Obviously you don't know the deal. The regime in Iran came to power in 1979, and a few years later it was put on the U.S. list of terrorism. That's at most "30" years, not 40. Where do you get your facts?
Factual error 2: "On top of this, Iran is actively seeking the atomic bomb."
That is what the U.S. has alleged. Although the UN under pressure from the US has cited Iran for lack of cooperation, it has never alleged or shown evidence of such a thing.
Facutal error 3: "And in a year or two they will have it (the bomb)."
We have been told that since about 1993. And yet the "one year or twos" have come and gone, and there is no bomb. Many have stopped listening to Chicken Little.
Factual Error 4: "Since they (India and Pakisatn) both got the bomb all they do is strut at the border like chickens."
They have been struting along the border like chickens for decades. They didn't start doing this after they got the bomb. And they still lob shells at one another from time to time.
Your article is filled with more factual errors and thus invalidates your conclusions.
I believe it.
I don't think Iran is an evil country. I believed that Iran government is more honest than our government to their own people. Iran is not stupid enough to attack but Israel and US are ready to bomb Iran when the time is right. But I think bombing Iran is crazy. Iran is becoming more powerful in military except for the nuclear bomb. I pray to God US don't become an aggressor against Iran.
because i found you a foolish people.why you are i mean american people angree with iran? how can you call a great people terrorist while a majority of your country scientist are iranian.how can you insult Mr Ahmadinejad with bad words while you dont know him well? let me tell you the answer.because we are great people and never follow your country policy.you spend a lot of money every day to kill people all over the world to get your benefits.exaples are afghanistan,pakistan.iraq,chechen and other area of the world.why you are not angree with isreal nuclear atom.what is diffrence between atomic bomb of thid country and or country if we assume we are going to make bomb.try to undrestand bomb is bomb.then you should first fight with your country policy makers which are supply of atomic bomb.then fight with your counter part i mean isreal which have almost 500 atomic bomb.
i am so sorry for you and all people that think like you.Ahmadinejad is a gentelman ,a professor and a pious man.we love him, support him and follow him.