Thirty-six years ago, the CIA screwed-up.
They stuck their nose in a place it didn’t belong, they picked the wrong side, and they underestimated the revolutionary zeal of the masses…
The place was Iran, and the year was 1979. Spooks tried to prop up the Shah of Iran with a heavy hand. Ruhollah Moosavi Khomeini took power, and Persia lost two generations to an authoritarian democracy.
The Iranian revolution wasn’t supposed to happen. According to the textbooks, revolutions happen after a leader loses at war, when there is a financial crisis, or when the country has a military with an axe to grind.
None of those things were true. Iran was enjoying peace and prosperity — but the massively popular religious theocracy took over with blinding speed and caught the CIA flatfooted.
Now, times are changing.
Detente blows in the wind. Already, President Obama and the Iranian leaders have agreed to the framework of a peace deal, perhaps ending the threat of a nuclear war and throwing open investment in trade in the 18th largest country on earth.
Lots Going for It
Iran is a country with 80 million people and the world’s oldest civilization…
It also has the world’s third-largest oil reserves (with 30 million barrels of oil floating in tankers ready to hit the market) and a young, well-educated, and Western-looking population. The average wage is less than in Vietnam.
And what gets my juices flowing: Tehran also has the most undervalued stock market on earth.
Undervalued
The average price-to-earnings ratio is 5.5, and the average dividend yield is 15.8%. The total market value of the 337 companies listed is just $90 billion.
Imagine what happens when Obama lifts the economic sanctions and hedge funds flock to Tehran — something that could happen as soon as June 2, 2015…
I’ll tell you what happens, because we know. We have seen it before. It will launch…
But don’t take my word for it. The Wall Street Journal says:
The stock market in Tehran to be among the biggest early beneficiaries of foreign investments if a final sanctions-lifting deal is sealed.
The Tehran Stock Exchange has the potential to go up 2,500% or more.
Here is Russia post-Soviet Union… a 3,900% gain:
Vietnam after it opened to foreign investment:
South Africa after the end of apartheid in 1994:
The list goes on and on. Poland, Mongolia, Saudi Arabia… all the charts look the same.
Here’s Egypt, a 2,700% gain:
When sanctions end and foreigners are allowed to invest, new frontier markets are flooded with money from New York, London, and Hong Kong.
Nobody wants to miss out on the big gains. And those big gains come hot and heavy.
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Real Rial
Iran wants the money. The country is trending toward capitalism. It isn’t nationalizing assets — it is selling them. Iran will raise $12.5 billion this year by selling state firms, including two refineries.
There are other things you should know. For example, Iran was the only country in the Middle East to hold candlelight vigils after the 9/11 attacks on America. This is because the vast majority of the country (two-thirds, or some 50 million people) is under the age of 30. They were born after Islamic revolution in the 1970s and, having tried theocracy, would like to try something else.
Change Will Happen Fast
At the moment, international sanctions make it impossible for anyone outside of Iran to invest there. But that will change in an instant if the nuclear deal is approved and sanctions are removed.
Iranians are buying equities as they look forward to the boom times. The Tehran Stock Exchange has climbed 9% since the tentative steps towards a deal were announced two weeks ago.
I am currently doing my due diligence on companies that will be first movers once Iran is open for business — companies you can buy now.
These include regional shipping companies, airlines, and oil service companies with historical ties. We are early, but in this game it is better to be early than late.
Once we are able, we will invest in the companies that will be proxies for the country as a whole: oil companies, banks, telecoms…
All the best,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
