1. By www.ProfitableInvestingTips.com

2. Brazil rode high during its
commodity boom and has been
licking its wounds ever since.

3. Venezuela bought friends in the
Caribbean with discounted oil
and now its citizens cannot find
milk, diapers or toilet paper in
the stores.

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5. Beware of the resource curse of
boom and bust cycles in
commodity dependent
economies.

6. Bloomberg writes about
the economic meltdown in one
resource rich economy, Mongolia.

7. Mongolia, a mineral-rich and
landlocked $12 billion economy
bordering Russia and China, is
staring at a full-blown balance of
payments crisis.

8. It’s caused barely a ripple in
global financial markets, but the
nation’s economic meltdown
offers instructive lessons to far
bigger resource-reliant
economies like Brazil, Venezuela,
Russia and Saudi Arabia.

9. An overabundance of natural
resources can result in lopsided
economic growth, government
waste and boom-bust cycles that
can leave a country’s finances in
tatters.

10. Perhaps you have engaged
in foreign direct investment in
countries like Mongolia, Brazil,
Russia or Saudi Arabia or have
bought into stocks of companies
that invest in these places.

11. If that is the case you need to
beware of what the economists
call the resource curse of boom
and bust cycles.

12. Mongolia, like other resource rich
countries, rode the Chinese
economic boom to the top and
then started to use their cash
flow to get or issue credit to
build too fast and syphon off
their riches just as the riches
were on the downturn.

13. Investing in these countries can
be profitable but how do you
proceed in order to avoid losses?

14. Our direct foreign investment
article provides a few clues.

15. Foreign direct investment is
done by folks with lots of money
and the intention to stay a
course and make a profit.

16. If you are looking for offshore
investment ideas, take a look at
where foreign direct investment
goes year after year after year.

17. There have been changes afoot
regarding where foreign direct
investment is going.

18. A very useful reference in this
regard is the just published
United Nations study, World
Investment Report 2013.

19. We have used 2007 and 2012 as
bookend comparison years as
2007 was just before the onset
of the worst recession in three
quarters of a century and 2012 is
the most recent year reported.

20. Of note is that direct foreign
investment has fallen in the
large majority of nations but
there are exceptions that should
help guide investors with their
fundamental analysis of where to
put their money in the years
ahead.

21. Take a look at the more recent
World Investment Report of the
United Nations for information as
to where the smart money is
going.

22. Then you can pursue investment
in commodity rich countries and
often pick up bargains when the
nation is going through the bust
phase of their economic cycle.

23. After all, the world always needs
raw materials and the world
economy always cycles up and
down.

24. Just don’t buy in at the top of a
commodity boom only to lose
your money in the bust.

25. Beware the resource curse when
investing.