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8:30 AM EST Friday, June 30, 2006: I'm back from the land Down Under, Australia. Here is why I should have visited the place two years ago. The top line is Australia's ASX 200 Material index (^AXMJ)*, the second is Australia's ASX 200 (the top 200 biggest Australian shares) compared with our Dow, Nasdaq and S&P.


This chart drops the materials index and just compares the ASX 200 against our Dow, Nasdaq and S&P.

There are eight reasons Australian stocks have done so well:
1. The mining boom. China gets 40% of its iron and coal from Australia. Then, there's zinc, copper, uranium, bauxite (aluminum), natural gas, gold, molybdenum, and every other mineral you can imagine, let alone pronounce.
2. They manage their country really well. The present conservative government (and the same prime minister) has been around for 10 years and has brought in business-friendly changes on every front, including tax reductions, less restrictive labor laws and removal of anti-competitive domestic trade practices.
3. The mandatory 9% super money. By law (since 1992) Australians have to put 9% of their salaries into a 401(k) type fund and invest the money into (basically) the stockmarket. The 9% is brilliant. It assures Australians of a prosperous retirement and relieves the government of having to fund it.
4. The intellectual export boom. Australians have always been creative. But they live at the bottom of the world. That has made them feel inferior. No more. There are now Westfield shopping centers, Macquarie infrastructure deals, Rinker's concrete trucks, and a zillion other world-class Australian business accomplishments, including designing many of the stadiums for the China Olympics 2008.
5. Huge entrepreneurial opportunities. All my friends' kids are starting their own businesses -- from managing money to signage for shopping centers. Optimism pervades Australia. There's nothing the Australians feel they can't do -- from building tunnels under cities, to railways to new areas, to killing Starbucks. Yes, you got it. Starbucks is falling on its tushy because Australians make better coffee and sell it better. Australia also has more than its fair share of self-made billionaires. What's new: It's proud of them.
6. Australia's population is now very diverse, courtesy recent immigration from Asia. Immigrants work harder, too.
7. Australia is world-class in every way. It's seriously gorgeous. Its climate is to die for. I played tennis outdoors in the middle of the Australian winter. Australia sensibly keeps its snow on its mountains. Mae West said it best, "Living well is the best revenge." She could have been referring to Australia. All this is why Australia is attracting rich retirees from Asia and the U.S. It's a really nice place to live, mate.
8. Overseas hedge funds discovered Australia. And pumped billions in. In the last month, they've pulled $30 to $40 billion out of Australia, causing the slump you see above. That creates a huge buying opportunity for the likes of you and me.

Australia is booming. There's no stopping it.

Australia is a refreshingly honest place. While I was there, an American reporter called Charles Krauthammer wrote a piece in the Washington Post, titled "Why I love Australia:" I go along with everything he says:

In the Australian House of Representatives last month, opposition member Julia Gillard interrupted a speech by the minister of health thusly: "I move that that sniveling grub over there be not further heard."

For that, the good woman was ordered removed from the House, if only for a day. She might have escaped that little time-out if she had responded to the speaker's demand for an apology with something other than "If I have offended grubs, I withdraw unconditionally."

God, I love Australia. Where else do you have a shadow health minister with such, er, starch? Of course I'm prejudiced, having married an Australian, but how not to like a country, in this age of sniveling grubs worldwide, whose treasurer suggests to any person who "wants to live under sharia law" to try Saudi Arabia and Iran, "but not Australia." He was elaborating on an earlier suggestion that "people who . . . don't want to live by Australian values and understand them, well then they can basically clear off." Contrast this with Canada, historically and culturally Australia's commonwealth twin, where last year Ontario actually gave serious consideration to allowing its Muslims to live under sharia.

Such things don't happen in Australia. This is a place where, when the remains of a fallen soldier are accidentally switched with those of a Bosnian, the enraged widow picks up the phone late at night, calls the prime minister at home in bed and delivers a furious, unedited rant -- which he publicly and graciously accepts as fully deserved. Where Americans today sue, Australians slash and skewer.

For Americans, Australia engenders nostalgia for our own past, which we gauzily remember as infused with John Wayne plain-spokenness and vigor. Australia evokes an echo of our own frontier, which is why Australia is the only place you can unironically still shoot a Western.

It is surely the only place where you hear officials speaking plainly in defense of action. What other foreign minister but Australia's would see through "multilateralism," the fetish of every sniveling foreign policy grub from the Quai d'Orsay to Foggy Bottom, calling it correctly "a synonym for an ineffective and unfocused policy involving internationalism of the lowest common denominator"?

And with action comes bravery, from the transcendent courage of the doomed at Gallipoli to the playful insanity of Australian-rules football. How can you not like a country whose trademark sport has Attila-the-Hun rules, short pants and no padding -- a national passion that makes American football look positively pastoral?

That bravery breeds affection in America for another reason as well. Australia is the only country that has fought with the United States in every one of its major conflicts since 1914, the good and the bad, the winning and the losing.

Why? Because Australia's geographic and historical isolation has bred a wisdom about the structure of peace -- a wisdom that eludes most other countries. Australia has no illusions about the "international community" and its feckless institutions. An island of tranquility in a roiling region, Australia understands that peace and prosperity do not come with the air we breathe but are maintained by power -- once the power of the British Empire, now the power of the United States.

Australia joined the faraway wars of early-20th-century Europe not out of imperial nostalgia but out of a deep understanding that its fate and the fate of liberty were intimately bound with that of the British Empire as principal underwriter of the international system. Today the underwriter is America, and Australia understands that an American retreat or defeat -- a chastening consummation devoutly, if secretly, wished by many a Western ally -- would be catastrophic for Australia and for the world.

When Australian ambassadors in Washington express support for the United States, it is heartfelt and unalloyed, never the "yes, but" of the other allies, perfunctory support followed by a list of complaints, slights and sage finger-wagging. Australia understands America's role and is sympathetic to its predicament as reluctant hegemon. That understanding has led it to share foxholes with Americans from Korea to Kabul. They fought with us at Tet and now in Baghdad. Not every engagement has ended well. But every one was strenuous, and many quite friendless. Which is why America has such affection for a country whose prime minister said after Sept. 11, "This is no time to be an 80 percent ally" and actually meant it.

My wife was born in Western Australian. It's three times larger than Texas. And it grows big things. This is a mud crab:

My nephew got nipped trying to catch one of these things on an Australian beach.

This is him holding one at the Sydney Fish Market. It was alive and its claws mercifully tethered.

The sign on the "highway." I like their priorities -proper order.

My wife and my sister, in southern Western Australia -- about as far as you can get from New York, without going to the South Pole.

Australia has its own language. Chooks are chickens. To hire is to rent. To blow through is to go away. Being a dole bludger is someone who lives on unemployment benefits, even though work is available. Everything gets done in due time, "No worries, mate."


These two are Sydney streetsweepers. They carry walkie talkies. If there's an emergency, head office can contact them immediately. "What sort of emergency?" I asked. They answered, "Someone might spill a bin of papers on the street. We have to get over there and clean it up." I don't make this stuff up!

I found some bonzer (great) money managers in Australia. I'm giving them some money. I also found one stock I really like, Kagara Zinc (KZL.AU). I'll write more about it on Monday. For now, I got major jet lag.

Footnote:
* ASX code: XMJ
The GICS Materials Sector encompasses a wide range of commodity-related manufacturing industries. Included in this sector are companies that manufacture chemicals, construction materials, glass, paper, forest products and related packaging products, and metals, minerals and mining companies, including producers of steel. GICS Materials aggregates many sectors from the ASX classification system, Gold, Other Metals, Diversified Resources, Building Materials, Chemicals, Paper and Packaging and some of the Diversified Industrials.

Australian quizes:
Q: What do you call a boomerang that does not come back?
A: A stick.

Q: How many Australian men does it take to change a light bulb?
A: None. It's women's work, mate.

Q: What is the difference between an Australian wedding and an Australian funeral?
A: One fewer drunk at the funeral.

Q: What's the Australian male's idea of foreplay ?
A: Get ready, Sheila (Australia's universal word for woman).

Wimbledon Tennis is on:

Harry Newton

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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