Editor's note: This week, we’re focusing on “crisis investing,” a little-known investing strategy that involves buying hated markets for cheap. Casey Research founder Doug Casey used this simple method to make millions.
In the following essay, Nick Giambruno, editor of Crisis Investing, talks about the time Doug went to Rhodesia (now Zimbabwe) in 1979 looking for opportunity. At the time, Rhodesia was in the middle of a civil war. Most investors wanted nothing to do with the country, which is exactly why Doug went there.
According to Nick, there’s a similar investing opportunity in Zimbabwe right now. Investors who take advantage of this could quickly double their money. We’ll show you how at the end of this essay.
If you were in a window seat, you’d pull down the shade to reduce the risk of anti-aircraft fire hitting the plane.
At least that’s what flight crews used to tell tourists to do when landing in the African country of Rhodesia (now Zimbabwe).
The year was 1979. Rhodesia was in the midst of a civil war. On the ground, it was like a scene out of the movie Mad Max… soldiers, armored vehicles, danger and confusion everywhere.
Doug Casey was perhaps the only foreign investor still there.
Doug took a bus across the country, trying to avoid the Rhodesian Army and the rebels they were fighting. He kept asking what he should see while he was in the country, and he kept hearing about the Leopard Rock Hotel. So there he went.
What he found was a grand castle complex that Italian prisoners (captured by British forces) had helped build during World War II.
By 1979, the owners had converted it into a fantastical luxury hotel. It had 12 enormous suites, oversized fireplaces, crystal chandeliers, broad terraces, miles of horseback trails, a nine-hole golf course, 200 acres of garden with vast mountain views, and 50 acres of coffee trees. It was beautiful and huge. It had everything you would want in a luxury resort hotel.
Leopard Rock Hotel
It was the crisis and fear that generated such a dirt-cheap price. Investor sentiment couldn’t have been worse. In 1979, Zimbabwe was the last place most people wanted to put money into… which made it the best place in the world to go looking for bargains.
If Doug had bought the hotel in 1979 and sold it six years later, he could have made 150 times his original investment. These are the kinds of returns you can make by investing in crisis markets and only by investing in crisis markets.
You don’t have to trek through a civil war battle zone or dodge bullets to find these kinds of colossal returns.
I was just recently in Zimbabwe with Doug. And like in 1979, it has huge potential for profit.
If you’ve ever seen Zimbabwe in the news, I’m certain it wasn’t positive. If you’ve ever seen Zimbabwe in some sort of international competitiveness rankings, I’m sure it ranked at or near the bottom.
There’s good reason for that. The country is in an economic and political crisis. Hyperinflation has totally destroyed the local currency. There’s been some bad press, and rightly so. But there’s a lot more to the story…
Zimbabwe is rich in natural resources… gold, platinum, diamonds, and fertile farmland.
The geological potential of the country is huge. Zimbabwe has production upside in platinum and other minerals that few can match.
The bad press has conveniently (for us) camouflaged the opportunities in Zimbabwe. And that’s part of what makes it so appealing for us as contrarians.
Zimbabwe currently has a severe cash shortage. ATMs are running out of money, liquidity has dried up, and there’s panic selling. Plus, Zimbabwe has absolutely dismal public relations. You’ve probably heard only bad things about Zimbabwe, if you’ve heard about it at all.
Some of those negative opinions are valid. But having just spent 10 days in the capital city of Harare, I think they’re mostly overblown. Zimbabwe isn’t that different from other places I’ve visited with very poor external images, like Lebanon and Colombia. None of these places is even a fraction as bad as the press would suggest.
Another misconception about Zimbabwe is that it’s dangerous and full of crime. While there is a crime problem in neighboring South Africa, Zimbabwe is pretty safe. I never once felt uncomfortable and neither did any of the locals we spoke with. In South Africa, it wouldn’t be uncommon for someone to kill for a cell phone. But not in Zimbabwe. For whatever reason, that’s just not their culture.
Zimbabwe has enormous wealth. It has some of the largest platinum, diamond, and gold reserves in the world. It has an educated population, relatively decent roads and other infrastructure, and an abundance of productive farmland.
The country should be one of the richest in Africa… not one of the poorest.
For Zimbabwe to improve, the government must be less hostile to the country’s crucial industries. That could happen soon. President Robert Mugabe has basically run the show since the country’s independence. But he is 92 years old, and it’s only a matter of time before the country moves on.
There’s a real chance for things to get “less bad.” And because things are so dirt-cheap, that could mean huge profits.
Doug and I met with the top dogs in the government on our recent trip. It appears that, after hitting rock bottom, they understand they have to make some radical changes.
Surprisingly, in our meetings, nearly all of the top officials in the government understood the perils of Keynesian economics.
Some even quoted Ludwig von Mises, the godfather of free-market Austrian economics, in their internal memos. Seeing this in a country known for its destructive economic policies felt like stepping into the twilight zone.
Nobody knows if the government will actually make the needed changes. But I think there is a plausible chance the country will turn around. And given how cheap some asset prices are right now, the risk-reward ratio is in our favor.
This is exactly the kind of contrarian situation I look for in Crisis Investing. It’s an environment where we can find huge bargains. It’s a risky bet. But because the upside is so large, it’s one worth taking.
Editor's note: In April, Nick revealed to his readers two ways to profit from Zimbabwe’s crisis. One of those picks is up 9%. The other has surged 31%.
Those are big moves for such a short period. But Nick thinks both could deliver 100%+ gains.
You can get in on these investments by signing up for Crisis Investing. But before you do, we want you to try our newest training series. This FREE, four-part workshop tells you everything you need to know about crisis investing. As you’ll see, many of the world’s legendary investors used this same simple approach to make billions.
Just remember, both of Nick’s Zimbabwe picks are on the run already. If you want to make money in this crisis market, now is the time to strike. Click here to get started today.