Jay: This week’s show guest is Kim Iskyan, who is the publisher at Stansberry Churchouse Research. Kim spent more than the past 25 years exploring and analyzing global markets. He’s been a director of research for a large emerging investment bank, a hedge fund manager, and also an advisor for Fortune 50 companies on political risk. Kim has lived and worked in ten countries, including Spain, Russia, Sri Lanka, and the United State, and he now lives in Singapore. Kim, welcome to the show.

Kim: Hey, Jay. How are you? Thanks for having me on.

Jay: Yeah. I’m glad that we could connect and you could get back on the show. And I’m excited to catch up and hear about all the cool stuff that you’re working on. But before we do that, I think my introduction there actually didn’t do justice because you have probably one of the most diverse backgrounds that I know of. And I thought I had a diverse background because I grew up overseas as well. But you definitely far surpass me. So maybe you could give our audience a little bit of your background — where you came from and how you came up, and how you became an investor.

Kim: Great. I was born in the U.S., Jay, and moved around. I’ve lived in 10 states in the U.S. in total. But when I was a kid, I moved to Spain. I grew up in Madrid, and my mother is from the Netherlands, and we traveled around a lot in Europe as I was growing up. And then I went to college and grad school in the U.S. I wound up going to the former Soviet Union and lived in Armenia. I lived in Russia for nine years. I worked for a few investment banks, and I ran a hedge fund there, as you mentioned. I lived in Kyrgyzstan; I lived in Sri Lanka, and Mexico for a while, the Netherlands. It’s kind of funny. Over time, boundaries and barriers and borders kind of blur. The world is seamless in a lot of ways, especially now with technology and, depending on the passport you have, travel. And I think, just to wind this back around to being an investor, I think that, as an investor, when you start to see borders, it’s only going to hurt you because money flows everywhere. And if you view the entire world as your potential investment platform and, to the extent possible, you ignore nationality and culture and language, I think you’re going to be a long way ahead of most people who get kind of caught up in all sorts of issues that are kind of irrelevant to investing.

Jay: Right. I think that’s very, very true. And we’ll talk about that more in depth. I know that you talk about it a lot, trying to get out of that home-country bias that a lot other of people, especially in the West, have — particular in the U.S. I know for a fact that they do.

Kim, I’m just curious. You mentioned you spent some time in Madrid, so I gather that you speak Spanish. And then you said you also were educated in the States. So was it the Army? I get the same question because I lived abroad a lot. Was it a military background, or was it just an international family that you have?

Kim: It’s kind of funny. My dad, as a college student in the early ’60s, he traveled around. He was American, but he traveled around Europe, and he liked Spain a whole lot. So years later — he was a nuclear engineer; he worked on safety systems for nuclear power plants. And in the U.S, the nuclear power industry was contracting in the ’70s and then that was accelerated with the Three Mile Island accident in 1979. So he had to pretty much go where the work was. And Spain’s nuclear power industry was just evolving, so he said, “Let me see if I can find a job in Spain.” So we wound up moving to Madrid.

It’s funny. Spain now is very much integrated. It’s European both in fact and geographically. But at the time when I lived there, the expression was that Europe ended at the Pyrenees, and Spain was, strictly speaking, part of Europe, but it was not part of the E.U. until the late ’80s. And it was really a developing country in a lot of ways. It’s extraordinary how countries develop and how the perceptions of countries can develop over just a few decades.

Jay: Absolutely. I think when we first connected last year, I think we had a conversation about myself. I also grew up overseas in Saudi Arabia. Before this Aramco IPO, no one had ever really even thought about it since the Gulf War. People kind of forgot about that. And then all of sudden, everyone is like “Saudi Aramco. Right. Saudi Arabia.” But I definitely think that it had an influence on me, being able to travel overseas and internationally. And I imagine it was the same for you. What took you to the Soviet Union? Did you spend any time on Wall Street first and then take a job over there? Or was it straight out of the gates?

Kim: No, I studied Latin American history in graduate school, and then I did the logical thing and moved to New York and got a job on Wall Street. My hook was that I spoke Spanish, and the Latin American stock markets in the mid-’90s were just taking off. So I wandered around and met people and called up alumni from the university that I went to and said, “Hey, can you meet me for a cup of coffee.” And I eventually found a job as a sales assistant at a mid-tier investment bank on the sales desk for a Latin American institutional equity sales and just learned one thing… You know how these things go. In the middle of it, you learn a whole lot, and you learn a lot more than if you had spent two years trying to get an MBA or studying finance or whatever. It was all learn as you go.

From there — to address your question — I wound up hooking up with a contract with the U.S. government because the U.S. government in the mid- to late-’90s was looking at the former Soviet Union and said, “Well, gosh. They just escaped communism. We have to make sure that they don’t go back to communism. So why don’t we create stock markets in some of the countries of the former Soviet Union since, as part of the privatization process, employees of factories and companies had been given privatization vouchers.” That is, all these companies had been state-owned, and then one day they said, “Guess what? The state no longer exists in that way, so you, Mr. & Mrs. Factory worker, you own part of this company now.”

Jay: Wow. That’s pretty cool.

Kim: So, Uncle Sam went in and said, “Why don’t we create a venue for these new shareholders to be able to trade their shares?”

So I went to a country called Kyrgyzstan in Central Asia that borders Northwest China and the south of Kazakhstan, to help build a stock market.

Jay: Wow, yeah.

Kim: It was exciting. It was extraordinary. I’ve wandered through… Kyrgyzstan you can barely find on a map, and we’re talking 20-plus years ago. Doing a phone call, you had to call the operator first and then the operator could make the phone call for you. It was that kind of place. And I went to the most remote places of one of the more remote countries in the world to sit down with factory managers who, in their office, they had a huge picture of Lenin. So this guy is sitting under a portrait of Lenin, and I’m telling him about a stock market and why he should list his company’s shares on a stock market. It was… I didn’t quite appreciate it at the time, but it was pretty surreal.

Jay: That is incredible. Was there any sort of safety concerns that you had when you were doing this work?

Kim: No. Kyrgyzstan is… That wasn’t really a factor. It was peaceful. They subsequently went through two revolutions in the span of eight or ten years. But this was well before that, and it was a beautiful, nice country. The stock market still exists — I visited a couple of years ago — but it doesn’t have much volume, as you might guess.

From there, on a different contract, I went to Moscow on a World Bank contract. And the Russian stock market was taking off, and I knew just enough about the world of finance from my two years on Wall Street, just enough about that part of the world from my year-plus in Kyrgyzstan and Russia. So I got a job with a local brokerage house, and that was…

Your know, Jay, there’s some times in history where you’re at the right place at the right time with just the right combination of skills, and you’re very fortunate that everything comes together. With the skills I had, if I had been in New York, I would have been some junior analyst wherever in some boring investment bank cubicle farm. But in Moscow, I could string together a sentence in English; I could perform basic financial analysis; I could speak some Russian; and I was golden, in relative terms. So I wound up being there for nine years and worked for a few investment banks and was head of research for a while for one of them.

And then I later on lived in Armenia when my… Well, I met my wife in Moscow, and then her job took us to Armenia, and I’m of Armenia descent. My last name is Armenian.

Jay: Oh, really? Okay. I was going to ask you, but I was going to ask you offline. There you go. I was wondering what Iskyan… There you go. That’s very cool. Do you still have relatives there, or is it a long…?

Kim: No, no. The history of Armenia was…a lot of people of Armenian descent, they lost their relatives there in the genocide of 1915 through 1918. And my great-great grandfather actually fled well before then. And he fled what is now Eastern Turkey. So, no is the short answer. One of the cool things about countries like that is you go back, and you say, “Hey, you know what? My great-grandfather left.”

And they say, “Oh, you’ve come home.”

Even though I’m light and I have blue eyes and Armenians are kind of swarthy and Mediterranean looking, they still say, “Oh, no, no. You’re just like one of us. You’re actually… Before Armenians because dark-haired and dark-complexion, they were light, so you’re one of the original Armenians.”

Jay: There you go. Very cool. So, Spain, Russia, U.S. for a bit, Russia, Armenia — all of these places that you’ve lived in, now Singapore — which one is your favorite? I know that’s hard to say, but is there one place that just stuck out at you looking back?

Kim: I think a lot of it has to do with what you’re doing and where you are in your life, and I had a fantastic time in Moscow because I had an incredibly dynamic time, and everything was changing. And the country didn’t really know where it was going, and it was hugely exciting. But I was young and wasn’t married, didn’t have kids, and it was a very different proposition when I was married with kids years later. Just much more difficult. A huge, dirty city where it’s cold six months out of the year.

And then I think — to answer your question — I think Sri Lanka would probably have to take the crown. Sri Lanka is a beautiful country, incredibly diverse. It’s remote. Just this little island in the south of India, but it’s incredibly diverse in terms of culture, in term of geography. The food is amazing. I really loved it there. But again, with kids, it’s a little bit more difficult.

Jay: For sure.

Kim: So it’s always a balance of different things.

Jay: Very cool background. I totally agree with you. When I was younger, I spent a year in Tokyo. I was working at Lehman Brothers, and they sent me over there for a year. Career-wise, I was just a scrub. I was an analyst, and I was a nobody. But I think it was just the time in my life. I was young. I was single, and I just had a good time. I always have fond memories when I go back there.

So tell us. Now, obviously, you have a family, and you’re living in a first-world country, the city-state of Singapore, which is also one of my favorite cities. My wife absolutely loves Singapore because now that we have kids, it’s very, very kid friendly. I live in Hong Kong, and you know how it is up here. It’s all hustle and bustle and very kid unfriendly. So she goes there every summer, actually, for about a month with the kids.

So what led you down there, and what are you working on these days currently?

Kim: Well, about five years ago, we moved to the U.S., and I was looking for something interesting to do. I got in touch with an independent investment research firm and newsletter publisher called Stansberry Research. I had been in touch with them before and had spoken with them, and I had, “I’m back. I’d love to work for you.”

They said, “Well, we’d like for somebody to write a publication that looks at out-of-favor markets around the world and to find different investment angles.”

And I said, “I’m your guy.”

So I went to places everywhere from Venezuela to Iran to Macau to Argentina to Kazakhstan and wander around, talk to people, found some sort of investible angle, if there was one, or said, look this place is off the radar, and it’s off the radar for a good reason.

Then after a few years, we were going to leave the U.S. because we didn’t need to live there anymore after my wife quit her job. And Stansberry said, “Well, we were thinking of developing a business in Asia. Would you be interested in helping us out?”

I said, “Fantastic.”

So I came to Singapore to develop an investment research firm that’s really focused on publishing investment newsletters for individual investors in Asia as well as people in the rest of the world who are interested in investing in Asia and better understanding the investment potential and opportunities in this part of the world.

Jay: So for the audience listening in — and, Kim, I’m new to financial publishing myself. I actually didn’t know anything about it until maybe two years ago because, having come up through the institutional side of things, you don’t really get that exposed to it, especially not out here in Asia. I think maybe if you’re in the U.S., you’re probably quite familiar with…Stansberry is quite a household name as in Agora Financial in the likes. But I hadn’t really heard of it. When I started learning out it, it was eye opening because, basically, like you said, you get all this great research from institutional-caliber research that any individual can access through a newsletter. And it’s great. And I think your value proposition, being in Asia and being a global guy, I think it’s much stronger. If I was sitting in the U.S., I don’t think I would care to subscribe to another U.S. stock newsletter. But for people that might be sitting in the U.S. and they just want to know what’s going on overseas, I think it’s a tremendous value proposition.

So what are the different types on publications that you guys have?

Kim: I think, Jay, just to add to what you just said, I think that the whole value proposition also is that individual investors are at a pretty big disadvantage anywhere in the world because they… On the one hand, you have technology, and in the past 10 to 15 years, I think a lot of people said, “Well, with technology and with the ability to be able to access financial reports and research and news so easily, it’s kind of leveled the playing field for institutions and individuals.” So as an individual, I have access to all sorts of information that, 15 years ago, would have taken me days to put together.

But I think that kind of ignores the other side of technology, and that’s everything from algorithms to the sheer human manpower that institutions can put to work for analysis. Despite technology, I think when you look at how an individual investor who is not a professional investor, he or she is someone with a day job who doesn’t have all day to devote to his investments, it’s kind of like playing on the JV team and saying, “You’re playing in the NBA now.”

Jay: That’s a good analogy actually.

Kim: There is a huge disadvantage. So what we try to do at Stansberry Churchouse Research and what Stansberry Research tries to do too is go to individual investors and say, look, we can help you kind of bridge the gap and understand some of the things, some of the language, some of the terminology, some of the context. Because if you open up the Wall Street Journal today, you can learn all sorts of things, but unless you understand the context of it and what it all means and how it all kind of fits together — you look at inflation figures, and you look at political issues, and you look at macro-economic data, and you say “Okay, but what does that mean?” And I think that’s the tricky thing, and that’s where we try to piece it all together and say, “This is what it all means, and these are some investment ideas that you, Mr. or Mrs. Individual Investor, can use to capitalize on this and try to make money yourself.”

So we have a free daily e-letter where every day, we talk about personal finance and issues in the investing world and economics. And then we have an investment newsletter called the Churchouse Letter that addresses different markets in Asia, and we have investment recommendations that are mostly ADRs, also Hong Kong listed, securities. It’s around $99 year. It’s an inexpensive product.

Then we have a product that I write that’s called International Capitalist where I look at different markets around the world and stocks that are out of favor or that you wouldn’t hear of otherwise or that are disregarded for some reason — because of the business they’re in or because management is out of favor or the country is kind of off the radar. And I often go to some of these countries to check them out, to see whether the perception that they’re not good places to invest really matches with reality.

And then we have a third product that’s a cryptocurrency product where we look at different cryptocurrency opportunities in the market.

Jay: I think it’s a great menu that you guys offer. Peter, I guess your partner there, and it’s his son that does the crypto newsletter. Is that right?

Kim: That’s right. Tama Churchouse, yes.

Jay: So I think it’s a great blend there that you have. And you kind of get… Crypto is obviously very hot these days. But even just the Churchouse letter and what you do with your newsletter there, I think you get a very good base of coverage of international markets.

On your product specifically — and I read a copy of it, and it was very good, and I enjoyed it — tell us a little bit about what is your methodology. When you go find these out-of-favor and maybe looking for that asymmetrical bet, maybe going off the beaten path where someone might not be inclined to go to or looking under rocks, this sort of thing, and finding these great trades, is there a certain framework that you begin with and follow through to find these trades?

Kim: Well, I think I’d call myself a global opportunist. I think that there is always going to be, in the world, a market, there’s going to be a sector, there’s going to be a stock that, for some reason, is going through a rough patch and, as we all know, rough patches can go on for a while, but when they end, they end. And it takes a little bit for investors, for markets, for perception to catch up with the changed reality. And I far prefer to find something that’s out of favor where only a few things have to go right and the share price will double or triple than go someplace and find something that is in favor and everybody is throwing money at it, and if everything goes perfectly, it will rise another 10%, and if one thing goes wrong, it falls by 50%.

But I think I would distinguish… I don’t really like the term “contrarian.” People who say, “I’m a contrarian,” for one thing, they’re not because so few people really are. And I think that also, few people should be, because there is a certain reflexing attitude that if everybody likes it, I don’t like. And if nobody likes it, I like it. And you know what? The fact of the matter is that often, if something is out of favor, it deserves to be out of favor.

About four years ago — I mentioned Venezuela which, at the time, was in these throes of post-Chavez chaos, and I thought, this is interesting, and at some point, this will be very interesting. But I don’t think yet. And then, sure enough, it’s still in the throes of chaos and far, far worse four years later. I met a few people there at the time who had been on Wall Street who had quit. They are of Venezuelan descent or had grown up in Venezuela, and they had gone back home because they said, “You know what? I want to be here when things change, and at some point, things are going to change, and assets will be so cheap in this country, and it will be amazing.” You know what? I bet those people are still there still waiting for that day four years later.

To get back to your question, I really look for opportunities anywhere in the world where assets are out of favor, where assets are cheap for some reason but where there is a clear catalyst for something to change.

Jay: You bring up a very good point, actually, a very interesting point and a very good point in that, to a certain degree, markets are very efficient. Like you said, if something is priced cheap, then there’s probably a very good reason for it, and you’re probably not this genius that’s uncovered this hidden gem. And I think that a lot of less experienced investors, they’ll commonly fall for that. Look, everyone wants to try to find that hidden gem or that asymmetrical bet, and it’s a lot harder than most people think. So I think that’s quite interesting.

As far as when you look at exotic locations, let’s say, how do you screen? What’s your initial screening. The world is huge. Are there a handful of countries that you’re friendly with, that you have local contacts with that are sort of your go-to hunting grounds?

Kim: Yeah. I look for… First, I do look for countries where markets are fundamentally cheap and/or when you read about them, you only read bad stuff or you don’t read about them at all. You say, “Gosh, I know this country, but I never hear anything about it. What’s up with that?”

There are some countries where I… I spent time in Russia, and I was an analyst there, so I was very familiar with a lot of companies for a long time, and I still have a pretty good handle on a lot of different dimensions of the market. But I’ve worked in a number of markets, visited a lot of markets, and you read different things, you talk to different people, and at some point, someone says, “Hey, I’m really looking at this.”

It’s funny. Sometimes I start to dig into an idea and just something kind of clicks, and I think, “Yes, this idea makes a lot of sense,” and it ticks a lot of the boxes that you’re looking to tick in terms of valuation, in terms of public profile, in terms of trajectory and what the business is doing, in terms of management. Maybe something was wrong with management, and it’s been replaced. Maybe something was just askew with the entire business model, and that’s been changed — but some dimension where there’s been a shift. And that could be both on a company level as well as on a country level. And looking for those sort of step changes that take time to develop and take time to evolve. So those are some of the different things that I look for.

Jay: Very interesting. I love what you’re doing. It’s the type of thing that a lot of people wish they could go out and do. But most people, A, they’re too chicken to go to these countries and actually do the research or, B, they just don’t have the network or contacts or wherewithal to actually execute. So I think it’s pretty cool, and that’s why you have this great international capitalist newsletter where you do all the work, and we can just pay the fee and come along for the ride, which I think is great.

Now the letter, I imagine it’s like a closed subscription at the moment but you’re going to open that up pretty soon if listeners are interested?

Kim: Yes, we will be opening that up quite soon for subscriptions in mid-May.

Jay: Are there actual trade recommendations that a subscriber might get? Or is it more of just field research type stuff?

Kim: No, there are definitely investment recommendations. A lot of the issue is talking about reviewing a stock and explaining the context, like you would find normally, only they’re stocks you’re not going to see a lot of other investment newsletters be willing to bet because they’re in markets that are off the radar or out of favor.

I can give you one example of the sort thing that I like to do. I went to… A few months ago, I visited Bangladesh. Bangladesh is a country that, if you hear about it, it’s usually because it’s being flooded or because they just had a horrible garment factory fire. I think those are probably the two reasons that normal people ever hear about Bangladesh. But Bangladesh, for one thing, it has about half the population of the United States, so it’s an enormous country in terms of population, but it’s geographically the size of Iowa, which is about the size of Nepal. So it’s extremely small, and you have all these people packed in there. It’s a country that’s very poor, so it’s starting from a low base, but for, literally, the past 20 years, it’s had growth of somewhere between 5 and 7%, regardless of international or global financial crises or anything else. So it’s been growing really very fast from a low base, like I said.

It’s an incredibly difficult place to do business. The World Bank does a survey about how easy it is to do business in different countries, and Bangladesh ranks 176th out of 190 countries, and the capital is periodically rated the least livable city in the world.

I met some people of Bengali descent who had grown up in Vancouver, which I guess is often ranked as be best place in the world to live.

Jay: Exactly.

Kim: They were talking about how they moved from the best place in the world to the worst place in the world. Dhaka is not at all an easy place to get around, but it’s a fascinating country, and it’s growing so rapidly. One of the interesting things, if you look at large countries that are developing, and you think this country needs highways, it needs power, it needs trains, it needs all this infrastructure. And it’s a big country. So if you build a highway, it has to go a long way. One of the strange, competitive advantages of Bangladesh is that it is so small. So if you want to put up cell phone towers, you don’t need a million on them because it’s a relatively small country, and you don’t have to have them spread around everywhere. And if you’re building a highway, you can build a relatively small highway and you’re connecting the entire country. You’re not building a highway across Russia.

So in terms of development and distribution channels, you can really see how a country like Bangladesh, it has some slightly unusual advantages. And because things are such a mess in so many ways in my mind, but the country is still growing so fast, if it got a few other things right, and if, instead of being 160th out of 190 countries, if it were somehow able to scramble up to 120th, that would be an enormous change.

That’s one of those places that you don’t hear about much, but if I had $10,000 that I was looking to put away somewhere and not think about for the next 20 years… Because this is going to a country that’s going to grow 4 to 7% per year for the next 20 years, easily. And economic growth does not always translate into stock market growth for reasons that we’re all very well familiar with, but if you have that wind at your back and that sort of patience, Bangladesh is, I think, a very exciting place.

Unless you’re ready to be really adventuresome and go in and try to open a local brokerage account, the only real way to invest is through an ETF. It’s listed in London.

Jay: That would be like a country level?

Kim: Yeah. Country level. The ticker in London is XBAN. In International Capitalist, I mostly focus on stocks rather than ETFs because people aren’t all that interested in ETFs, but this is a particular market and situation that I think is really kind of amazing.

Jay: That’s awesome. Thanks for giving us that little nugget. I appreciate that. I think my audience will definitely look that one up and check it out. Kim, it’s been fun catching up. It’s been a pleasure. Thanks for coming on the show. I know you’re doing a conference up here in June, so I’ll be seeing you then. Have you got any other data points this year that you’re excited about?

Kim: I’m going to make a few trips for International Capitalist. I’m going to go to Uzbekistan, which is a country that’s evolving quickly. Offhand, Jay, I wish I could tell you something more exciting.

Jay: When are you guys opening the International Capitalist newsletter for new subscribers that might be interested after hearing our little conversation here?

Kim: We’ll be opening in mid-May. And if you go to StansberryChurchouse.com, we have a free daily e-letter. You’ll certainly hear about it there. Now I wish I could give you a better URL, but I can’t.

Jay: No worries. In addition to Stansberry Churchouse, the website, where else is a good place that people can find you and connect with you? I don’t know if you’re on any of the social stuff or not, but is the website the best place?

Kim: The website is the best place.

Jay: Got it. Cool. Thanks for coming on, Kim. We appreciate it. Looking forward to, obviously, seeing you up here in Hong Kong and hearing about your next International Capitalist trip. We’ll certainly link up the website for our listeners so they can sign up for the free daily newsletter and just keep an eye out on when you open up the cart again.

Kim: Excellent. Thanks so much for having me on, Jay.

Jay: Great. Take care.

Kim: Alright. Bye-bye.