Introduction: Edward Karr is an investor, asset manager, investment banker and entrepreneur with more than 20 years of successful international business development and investment experience. Edward Karr has been active in all aspects of the capital markets, including fundraising, trading, asset management and deal structuring. His focus is on working with institutional investors, asset managers, family offices and persons of high net worth. Karr is also a champion for expatriate Americans and frequently speaks with high-level government contacts on the challenges facing overseas Americans.
Daily Bell: Give us some background, for people who don't know you.
Edward Karr: I am a financial professional and I've been working in this area for several decades. I have successful international experience in areas such as investment banking, business development and investing.
Daily Bell: Capital markets specifically?
Edward Karr: Sure, specifically, trading, asset management, deal structuring and raising capital. Our approach is to deal with institutional investors and ultra high net worth individuals. I also have an interest in helping American expats, given how difficult the US government is making things abroad in banking and financial terms.
Daily Bell: Tell us about your firm.
Edward Karr: I'm the founder of RAMPartners SA based in Geneva, Switzerland. Since 2005, we've helped raise more than $200 million for small cap companies in natural resources, high technology, energy and health care. We act as an introducer to professional and individual investors around the world.
Daily Bell: It's part of a larger group of partners, is it not?
Edward Karr: Yes, We are members of Global Alliance Partners (GAP), which focuses on the mid-market financing segment. We have partners throughout the world and are constantly seeing interesting and unique opportunities. We sift through all of the opportunities and introduce select situations to our clients. I also write about these opportunities and for me it is a labor of love. I have a strong free-market perspective that I share with other like-minded individuals. I've built this network over the last 20-plus years and it has both financial and personal benefits. For my clients it's useful from an investment standpoint, as many of these institutions and individuals are in the marketplace. They see unique deals flow from us they cannot find anywhere else.
Daily Bell: When you say clients you mean accredited investors?
Edward Karr: Yes. An accredited investor is a wealthy investor, though regulations are shifting and becoming more inclusive. More investors – and less wealthy ones – have the opportunity to invest in start-ups and private placements in ways that were not feasible before. Judicious involvement in this sector can lead to positive returns and more success rather than less. The key is "judicious." This business can be a minefield if the individual doesn't have proper advice and counseling.
Daily Bell: Which is why investors turn to someone like you.
Edward Karr: Those I work with and send my analyses to can gain a head start when it comes to discovering these high-growth opportunities being selected by top money managers, It is timing that creates success more than anything else. And physical location helps, as well. I'm based in Geneva, Switzerland and that adds to my abilities to network and find out what's going on before it becomes general knowledge.
Daily Bell: You're not Swiss by birth, though.
Edward Karr: No. I was born in New York but I left the States initially at 19 and by now I've traveled around much of the world and all the continents. My international experience has helped reinforce for me the conclusions I already developed. I believe personal responsibility and hard work are keys to success rather than government-imposed solutions.
Daily Bell: Do you speak in addition to writing?
Edward Karr: I speak a good deal about financial issues and try to put them in a larger context. I want to familiarize people with the great work of the school of Austrian economics and the thoughts of people like Ludwig von Mises, Murray Rothbard and F.A. Hayek. I also speak often as President of the American International Club of Geneva, so if you are in Geneva, come to one of our events and you can see me in action!
Daily Bell: How about politics?
Edward Karr: I try to be active in politics. I've been a member of the Republican Party for years as I've always seen them as the freer market option – more sympathetic to private initiatives than the alternatives. I've also tried to support fiscally conservative candidates and am the current Chairman of Republicans Abroad Switzerland.
Daily Bell: Take us back before RAMPartners. Were you always in investments?
Edward Karr: I ran a private Swiss asset management and investment banking venture out of Geneva for six years. I handled all the capital market transactions and marketing activities. I also had the honor in 2004 of being named by Futures Magazine as one of the world's Top Traders. I contributed to media outlets such as CNBC, which had me on a good deal, and I was interviewed numerous times by various financial publications.
Before then I was involved with Prudential Securities in the United States and prior to that I was with the United States Antarctic Program and spent over a year in the Antarctic. I received the Antarctic Service Medal for outstanding service.
Daily Bell: Where were you educated?
Edward Karr: I studied at Embry-Riddle Aeronautical University, Lansdowne College in London, England and later I received a B.S. in Economics/Finance with Honors (magna cum laude) from Southern New Hampshire University. However, my best education has come from all of the successful entrepreneurs I have met over the years.
Daily Bell: You seem to be an outdoor guy. Hobbies?
Edward Karr: I'm a licensed pilot and certified rescue scuba diver and I enjoy flying and scuba diving to this day. I also spend free time skiing and mountaineering, which we can do quite a bit in Switzerland. My wife is Italian and I've lived in Geneva since 1997. In addition to outdoor activities, I helped found the "Americans in Switzerland Working Group" last year with an outstanding group of patriotic expatriate Americans.
Daily Bell: That's probably useful to use in your larger business efforts. Many expats are also accredited investors.
Edward Karr: In part, my newsletter will be aimed at them. It's partially based on the rules coming into play at the SEC that expand the number of people who can invest in the kind of opportunities we offer. I'll find the opportunities and then use Austrian economics to analyze the business cycle and try to determine some general guidelines focused on investment applicability.
Daily Bell: Great idea, though doesn't Austrian economics tell us that projections are difficult to make because people often change their behavior when confronted with the challenges that people are trying to predict a reaction to?
Edward Karr: This is quite true, and yet the Austrian business cycle itself predicts certain banking and economic interactions that occur over and over. And this was codified by Mises himself, who also postulated Human Action and the whole idea of unpredictability. So you could say that at the center of Mises's thought is a kind of anomaly.
Daily Bell: We've pointed that out in the past.
Edward Karr: For one thing, there are things we CAN predict, of course – death and taxes and the like. What we can't predict for the most part is timing. And this goes for the business cycle itself. We understand what triggers it and how it resolves itself. Business cycles are always easy to look at after they happen. But plenty of people have gone broke trying to profit from it because they assume a general comprehension also provides them with specific insight into the mechanics of its revolution.
Daily Bell: How do you cope with that?
Edward Karr: You make certain assumptions based on what you can control rather than what you cannot. Your predictions will deal not so much with "what if" as "when." But if you invest with a concrete timeline you will either have to be very lucky or very good. That's not to say we discard timelines – only that we are very conscious that timing is the most difficult part of investing and ought to be minimized whenever possible. If your investment is pegged to a specific timeline you've got a most speculative one.
Daily Bell: Your success rate is pretty good, we hear.
Edward Karr: I've been working on the front lines for more than 20 years so I've learned a thing or two. I've had increasing success, which is gratifying personally and great for my clients. Most of it comes down to constant hard work.
Daily Bell: Can you boil it down to a formula?
Edward Karr: There aren't any secret formulas for investment success. A concept that comes to mind is Anthony Wile's VESTS model that you can find in his book High Alert. I've known Anthony for years, and I'm a regular reader of The Daily Bell. He is a significant if underrated thinker from a free-market standpoint. He postulates forces in our world that are focused on centralization, especially governmental centralization, and create a global conversation that reinforces that goal. That conversation is made up of what he calls dominant social themes, fear-based scarcity "memes." These memes are often not accurate, however, and it's our job to determine whether they are or not. Interestingly, even if they are not, they may still prove profitable in that they help create a reality – ephemeral or not – that provides us with an investment opportunity.
Daily Bell: In other words, you may or not believe in global warming, but carbon-based solutions to such a problem may at least temporarily provide investment success.
Edward Karr: This is true for many investments. In the long run, investing is the art of choosing the "right" alternative. But in the short run, insofar as investing is concerned, there is no "right" answer, only the correct one. And the correct one is to be ascertained by its profit production.
Daily Bell: It's an immoral art.
Edward Karr: I wouldn't ascribe morality or immorality to it. But certainly, over the long term, one can argue that human beings' influence on global warming, for instance, is indeed a questionable phenomenon or even untrue. We can postulate that it has been advanced for reasons having to do with control by those banking forces and others who want global governmental control and regulation – and it seems obvious that those forces exist. But from the standpoint of investing, one has to consider both short-term and long-term objectives. It may be that there is a short-term and definable profit to be made by offering services designed to mitigate mankind's contribution to global warming, even if we think it is a natural planetary cycle. Investing to some degree exists in the world as it is, not as it should, nor even as it WILL BE. It depends in part on your time preference.
Daily Bell: You differ a bit from your friend Dr. Fred Singer in that way.
Edward Karr: You interviewed him recently and I was pleased to introduce him to you. Fred is a scientist and the job of a scientist is very different than that of a professional investor. Again, we make choices based on the reality of the world as it is, including political and economic forces that are often joined together. As a scientist, Fred has the luxury of sorting through the facts and stating the truth as he sees it. The "truth" is not necessarily relevant to investing – and one could argue to some degree that truth is in the eye of the beholder. Investing is more pragmatic than that. The bottom line is what counts.
Let me briefly return to morality. One of the reasons I gravitated toward Austrian economics, however, is because I find this sort of free-market economics to be extremely MORAL. The morality is inherent in accepting the idea that human action is the foundation of society and personal responsibility is key. The most successful societies are those that allow the most individual human action. When I'm scrutinizing an investment, I'm always examining it in these terms. And to be honest, I much prefer an investment that encourages a particular kind of human action in the short or even the longer term than an investment that supports one that I might find distasteful.
Daily Bell: So you wouldn't invest in, say … the military-industrial complex?
Edward Karr: I might, if I saw an immediate profit opportunity. But I can't say it would be my choice. It would depend on the particular investment and the use to which the technology or service was being put. I'm old enough so that I want my choices to support my personal preferences if possible. It's a matter of personal control. I want my professional life to be congruent with my personal life. It helps in presenting my services as well. Ultimately, I'm offering myself to others, the sum of my "self" – including my knowledge, belief structure and methodology of perceiving opportunities. If my investment choices are aligned with my personal philosophy, that's a preferable congruence. I am taking human action that reinforces what I believe in – and hopefully, my philosophy, my perceptions and my system lead to success. That's the optimal outcome.
Daily Bell: It's not always easy to find opportunities that support an entrepreneurial society and generate significant revenue as well …
Edward Karr: This is true, unfortunately. More and more opportunities today exist in that netherworld between private initiative and government force. That's a dilemma of sorts. Do you take the cash or do you try to find alternative opportunities?
Daily Bell: Where do you stand?
Edward Karr: I believe this business (and any business) ought to be both fun and rewarding. And part of the fun for me is encouraging trends that I believe will help alleviate the direction in which this world is headed – which is obviously not a good direction, from where I stand. The Daily Bell calls what the West has gotten itself into politically "regulatory democracy." It certainly is regulated – it's been overtaken by regulators, in fact. In my lifetime, I'd like to make a small contribution to reverse that trend and promote more individual liberty.
Daily Bell: Sounds like there's a book in there somewhere, in addition to a newsletter.
Edward Karr: I am writing a book, yes. It will better position my views on how to use free-market thinking to analyze investment opportunities. It will be specific, too, drilling down into the mechanisms that you can use to ascertain opportunities within sectors identified by macro analysis. I'll discuss why someone needs to be very careful in international investing to avoid being scammed and identify certain "too good to be true" scenarios. I'll also try to put Switzerland in the proper context. Despite the recent difficulties, it continues to be an important player in world finance.
Daily Bell: It is truly an international financial center, the most important in the world.
Edward Karr: Yes, it does provide an institutional front line view of Europe's top banking and investment houses. One thing I'm seeing is that the bigger money is aligning with the entrepreneurs for the future growth potential. Commodity stocks, for instance, are one such play – especially gold and silver. I personally am waiting for the next gold up-leg. We started investing in gold back in 2003 and I think I understand the market fairly well.
If you can figure out the right asset class and allocation, then things become a lot simpler. From a private placement standpoint, you need to identify the right companies with the right management teams in the right sectors and then figure out the appropriate leverage and positioning. Provide capital to savvy entrepreneurs and you could receive the largest potential rewards for doing so.
Institutional investors tend to prefer private placements, as they may come at a slight discount. But the largest advantages are inherent in the opportunity itself, and that's why my report will really put the investor, the more regular investor, on the same page at the same time as institutional investors are finding out about it.
We know we can provide a legitimate value proposition. Here I am on the front lines in the private banking capital of the world. I interact on a daily basis with private family offices, pension funds, investment banks, private banks, international hedge fund managers, equity fund manager offices, etc. The ideas that pass muster are the ones I pass on to our higher net worth accredited investors.
Of course, anyone can read a report like this. But the regulators have created an environment under proposed rules where far more investors are eligible for opportunities we might unearth. It's a larger pool now and therefore a more important one that can utilize specific information.
I'll try to introduce equity opportunities fairly regularly, though the entrance fees may be fairly significant.
Daily Bell: What kind of opportunities are you looking at?
Edward Karr: Good question. Biotech, health sciences and natural resources come immediately to mind – especially silver and gold.
Daily Bell: Mining stocks?
Edward Karr: They've underperformed, but as physical gold and silver get more expensive, people will turn to paper alternatives. It's almost inevitable. We intend to be properly positioned; however, it may not be with mining stocks themselves …
Daily Bell: Why not?
Edward Karr: We are big believers in physical metals. You want to own gold and silver and have it in your possession. In addition, certain Exchange Traded Funds are one way to invest in gold and silver that we like. I remain a little wary of the junior miners, though that's an unfortunate position to take, as an entrepreneur. By investing in mining stocks you are deploying capital for productive capacity for gold or silver mining industries. But the industry is being regulated to death and ETFs provide us a good deal of additional leverage as well when it comes to purchasing capacity.
This is part of the larger dilemma we spoke of. I'd rather invest in the productive side of the industry than the ETF – consumer – side. But right now, I see ETFs as more feasible. I am hopeful that will change in the future. It has been a tough last couple of years (2011 and 2012) in the junior natural resource space. However, I do believe with all of the global Central Bank ongoing quantitative easing, precious metals are one sector every investor needs exposure to. As the currency wars of 2013 and on develop, we anticipate gold and silver continuing to hold their relative value. All fiat currencies will continue to debase. Therefore, the precious metals sector has tremendous upside and little downside. Once the metals do start to make their next move up, we are confident the junior mining companies will quickly follow.
Daily Bell: It's always a balance, isn't it?
Edward Karr: That's the frustrating part of this business but it's also a challenge at the same time. I see it as a very creative process that one can bring one's knowledge, energy and convictions to – and be rewarded for understanding the reality of the environment in which we all must live and work. At the same time, if you make the wrong choice, you suffer, as do your clients. It's a matter of pure human action. Every day you confront choices about what path to take.
Daily Bell: Well, it sounds like your choices go beyond business decisions now, with both a newsletter and book on your plate.
Edward Karr: I do have writing and publishing decisions as well, yes. But it's all part of the process and I would rather be doing this than anything else in the world. Every day, I wake up challenged and excited.
Daily Bell: Good luck.
Edward Karr: Thanks.
It is exciting to interview Ed Karr on the cusp of both a newsletter and book that will help people understand expanded opportunities they have. As a result of a changing regulatory environment, more and more will be able to invest in companies that have not yet gone public or are basically private entities that have only been available to "accredited investors" in the past.
As a free-market oriented publication, we don't believe such rules were ever warranted to begin with because the problem was never "scams" or fraudulent offerings in the first palce. Sure, there are bad investments offered by bad people, but the systemic crime had to do with overprinting by central banks – offered into a centralized securities system.
Couple the centralization of finance with central bank monopoly fiat money printing and you end up with a lethal cocktail of endless booms and busts – which strip investor profits and bankrupted many at regular intervals.
Regulators and legislators won't admit this, of course. The business of regulating is larger than ever these days. And so is the business of money printing. For example, today, as a result of the financial crises of 2007 and 2008, the Fed has monetized not just the US but the entire world with tens of trillions of dollars (no one really knows how much).
This monetizing is setting up further bubbles in numerous areas and inevitably there will be more and bigger crashes when central banks begin to tighten rates as economies finally heat up.
Millionaires and even billionaires will be minted, especially in the area of metals equity – as gold and silver will inevitably rise in price as this money-pumping, central banking mania continues.
In time all this will end in tears but not for those who actually understand the mechanisms at play, as Karr does. In order to be successful – like other top investors – Karr will have to choose his investments wisely and get in and out at the right time. Buy-and-hold is not the right strategy for a mania.
The selection of the correct opportunities – sometimes based on what Money Power itself is promoting and sometimes not – is Karr's forte, and something he will try to extend as the most extraordinary securities mania in history expands.
How will people who want to gain their fortune over the next several years know where to go, what to choose and when to take their profits? That's what professionals like Karr are there for. It is their counsel that will help investors navigate the promotional shoals of the next few years.
We look forward not only to watching Karr's business grow, as he is friend of the Daily Bell … but also to reading his publications and the book he is writing. His wisdom – and the wisdom of professional investors like him – will be sorely needed by investors in this Brave New Investment Era.