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. If you read the financial press, the news will reflect that corporations who are buying greater assets tend to be less US-based. For the last century or so, the US corporations lead the world in expanding their operations around the world. As the world changes, although it has a long way to go, the non US corporations have tended to be more aggressive in their expansion and the dollar figure seems to be in the billions. Every once in a while, the company funds will influence their clout for example, in 2008 China was consuming 60% of the iron ore supply (iron ore is used to make steel), when the price was rising the companies which supplied the iron ore were raking in the billions. The negotiation for price is the Chinese steel makers estimate how much steel they are going to make and negotiate with the big producers about price. The Chinese wanted the price to go down after a couple of years of increases; the chief iron ore negotiator was arrested until the price was negotiated down. This may not happen in all cases, but it does happen. The problem with billions at stake, politicians who do not directly own companies will try to influence companies to settle based on the revenues the resources bring into government coffers and the jobs they offer.

Linking to dividend paying companies, the world is changing but that does not mean the consistently profitable North American companies have to be switched to non North American companies. It is important to be aware of the pools of capital around the world because for investors – who has the gold (or pots of money) has say. When countries run large deficits, they may want to grow their economy to pay the debts, but in the short-term they have to pay attention to those that have the pots of money to buy bonds. From a small investor point of view, as long as you stick to profitable companies which earn enough to pay a dividend, you may have new owners or get bought out but in the end your investment has gone up and that is a good thing.

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