The Shadow Market conjures on privacy but what it really means is around the world there are billion dollar funds looking to invest in something which makes money and there is little regulation on the money. In the book The Shadow Market by Eric Weiner published by Scribner, NY, 2010, Mr. Weiner shows how the financial markets of the world are changing. It used to be the largest capital pools were a combination of money centered banks in New York, London and Frankfurt. The world has changed because of sovereign wealth – money controlled by individual countries (primarily enhanced by oil revenues); hedge funds; global market funds; state funds (China) and most of this money is not controlled by the US or western world. This mean these funds can have a say in how the world reacts to various crisis and proposed solutions. For example, China and India because their economies are becoming the biggest in the world and owning billions of dollars in US reserves can tell the US to pay down its debt. (that must have been an interesting conversation for the US President generally said to be the most powerful office in the world).The funds can invest around the world and as long as they receive resources from a country which allows them to tell others to tone down their ability to influence the government. All of this means the financial world is changing and other considerations need to be applied to solutions offered by the G7 and its institutions.

Linking to dividend paying stocks, while it is entirely possible to invest in North America or Europe, the reality is greater wealth is coming from other countries. The Shadow Market has the goal of buying into corporations and ensuring they continue to grow or be sold off so their funds grow. The Shadow Market is generally not interested in control the corporations, just trying not to lose money and make money. The Shadow Market because it tends to be risk adverse, has help create a great deal of financial vehicles which individuals can invest in to try to capture wealth creation around the world (this is a good thing). The Shadow Market funds are not homogenous, they are like all investors – everyone is looking for perfect information (which is only available in hindsight) which means many different theories are being used and tested. Some are good, some are not so good, but investing in profitable companies with a reasonably stable income stream never is a bad idea. Some years the growth is great, some years it is only good. As individuals we can live with good.

There are more questions than answers, till the next time – to raising questions.