I need to get off the Maduro train for at least a day. So I jumped into the mailbag to see what you've been writing lately. 

I received two compounded questions that I wanted to answer in detail. This is more of a mini-mailbag edition than anything else.

Best Stocks and Countries

Sean,

I appreciate your work. The content and your humor are amazing. It's the first thing I read. I'm developing a list of stocks to track that should do well after a significant market downturn. I'd appreciate your thoughts and suggestions on companies that should be included. Also, is there a 'best country' for an expat to live in?

Regards,

Phil S.

Thanks for the kind words, Phil. Let’s start with the stocks.

During downturns, defensive stocks lose the least, at least in theory. Consumer staples, healthcare, and utilities would be in this group. And after President Trump just increased the Pentagon budget to $1.5 trillion, I’d never short the defense sector.

Stocks that do well after downturns (what you asked for) are the early recovery leaders, such as transportation, financials, and technology. The hardest working man in the newsletter business, my friend and colleague Dan Amoss, and ace mining analyst Don Durrett, both believe that the gold and silver miners will jump out of the next market downturn, as do I.

This image may help you:

As for the best countries for expats, there really isn’t one answer. The way I’m looking at it right now is by asking these questions:

1. Where on the planet would I really like to live?
2. In which countries would my retirement income be tax-free, or at least taxed at a low rate?
3. In which countries would my income tax rate be low, or at least tolerable?
4. In which countries could my children, if I have any, get a great education?
5. In which countries would my consumption costs, like food and rent, be tolerably low?
6. In which countries can I be assured of good healthcare?

For instance, my son Micah is a bright kid. I’m not sure if high school in Italy is the right choice. We may keep the house here while we move to another country where he’ll get a better education.

Personally, I want to stay in Europe. I love Europe. I love old stuff. My house is an old farmhouse.

But Italy taxes retirement income at the maximum income tax rate of 43%. Not good at all. Luckily, I’ve got a few more years before that concern moves front and center. Consumption costs here are fine; food is getting expensive, but rent and mortgages are cheap. The food, wine, architecture, and people are second-to-none. After nearly four years here, we don’t even feel like immigrants anymore (my poor Italian language skills notwithstanding).

With all that in mind, Spain and Greece both look like great deals because they’ve got English language high schools, will give me a great tax deal on both my regular income and retirement income, and have consumption costs that are the same or lower than in Italy. 

However, the Netherlands, Belgium, France, Germany, Sweden, Norway, Ireland, and the UK are all no-goes, as much as I love visiting them. The taxes are astronomical, and you get nothing for them. I put Canada, Australia, and New Zealand in the same basket. (It amazes me how people get on planes to move to places, unaware of the tax rates they’ll be paying.) Czechia, Hungary, and Poland would be interesting, if not for the languages and the freezing winters.

I’ve never been interested in South America, but many Americans move there because of its proximity to the U.S., which is completely understandable. My good friend Alex lives in Panama because he can swim year-round. Again, I totally get that. If you have ancestry from down there, it’s the natural first place to look.

I’ve already lived in Asia. But places like Dubai and Abu Dhabi make a lot of sense for some. They’re low-tax, clean, safe, and great for entrepreneurs. Thailand (where my friend and author of Free The Animal, Richard Nikoley, lives), Malaysia (a favorite of the Nomad Capitalist Andrew Henderson), and Vietnam are all fun countries where you can live cheaply in the sun and are relatively safe. Singapore and Hong Kong are too expensive for most. And I won’t live in the Philippines again until they clean the place up.

In short, figure out which region on the planet you want to live in and then match that with acceptable tax rates, consumption costs, healthcare, and education (if you still have school-age children). Hope that helps.

Books and Gelato

Hello Sean,

I find your daily observations and insights most fascinating and relevant, and your writing style both engaging and fun. I particularly want to thank you for your reference to Amir Aczel’s Chance and the reference to Edward Thorp: A Man for All Markets. Add to that Dave Gonigam’s reference to Neil Howe’s Fourth Turning, it has been an enlightening year for me like no other in my octogenarian lifespan. I have a question: Is gelato made with water, not with cow’s milk? Thank you for sharing your delightful lifestyle, which conveys all of the joys and sights without the necessity for difficult travel these days.

Have a healthy new year,

Terry E.

Thank you for the kind words, Terry. But water? Water!? Absolutely not. Gelato is the creamiest ice cream there is.

Credit: TripAdvisor (La Venexiana, Asti)

Italians make gelato by preparing a milk-based mixture (usually milk, egg yolks, and enough sugar to give you Type 2 diabetes in one scoop), pasteurizing it, rapidly chilling it, and then slowly churning it in a dedicated freezer to get its dense, creamy texture.

Compared with ice cream, it uses more milk and less cream, incorporates less air, and is served at a slightly warmer temperature to enhance its flavor and softness.

My favorite flavor here in Asti is Ambrogio, which crushes Ferrero Rocher into a vanilla-hazelnut gelato. It’s delicious. Hazelnuts (nocciole) are native to Il Piemonte. The trees grow all over the damn place. 

As for books, I’m glad you liked those. I recommend Fortune’s Formula and The House Advantage for further reading. I think you’ll love them!

Wrap Up

I hope you had as much fun reading this edition as I had writing it.

Have a great day ahead.