Exchange-traded funds have made everyone into a global investor. Today, with the click of a button, we can gain access to everything from China and Russia to Turkey, Poland, Mexico and Vietnam.

With this newfound ability, however, come new risks. Company and sector-based analyses only go so far when looking overseas, particularly into emerging markets. For today’s global investor, geopolitical-, social- and country-specific economic risks are as important as single-stock factors in their potential impact on a portfolio.

As a result, smart investors are expanding the types of sources they consult in their research. Many are turning to Stratfor, a global intelligence company sometimes referred to as the “Shadow CIA.” Founded by George Friedman, Stratfor has more than 500 employees scattered around the globe, who aim to provide political, economic and military intelligence long before you read about it in the Wall Street Journal. For risk-savvy global investors, Stratfor’s Web site and reports are a key part of its due diligence.

Friedman discussed several emerging market economies of particular interest to Stratfor during a recent conversation with Matt Hougan.

IndexUniverse.com (IU.com): You and I have discussed Turkey in the past as one of your favorite areas of the world for investment. Why is that, and is it still true?

George Friedman (Friedman): Turkey is an island of stability in a region of chaos. To the northeast, you have the Caucasus, with Georgia and Armenia; to the northwest, you have Bulgaria; to the south, Iraq and Syria; and to the east, Iran. Of all these countries, Turkey has the largest economy. It is the 17^th-largest economy in the world.

It also has by far the largest and most capable army in Europe, possibly barring the British—and only possibly. Turkey has a substantial internal market and a substantial middle class. It has interesting wage differentials [against other nations], and a lot of American companies are looking at it as a place to go, not only to produce products, but to sell them. And of course, it is perfectly located strategically, with easy access to Europe, the Middle East and Eurasia.

It has weaknesses, such as the political split between the Islamists and the secularists. But radical Islam is not a major issue there, despite occasional terrorism. The issues in the southeastern part of the country with the Kurds are quite serious, but they don’t threaten the broader security of the nation.

Visitors to Istanbul will be stunned by the amount of economic activity. There is massive construction. And the banking industry is quite conservative, so it’s done well during the crisis. The Turks looked at some of the alleged sophistication in the banking system in Europe, and they were not impressed, so they decided to keep things simple.

IU.com: It may be an island of stability, but it’s surrounded by a sea of trouble. Shouldn’t we be concerned about having neighbors like Iran or (more distantly) Russia?

Friedman: Turkey is so strong militarily that neither the Russians nor the Iranians would dream of messing with it. In fact, both countries are very solicitous of Turkey and make sure they don’t alienate it. You’re really looking at the 600-lb. gorilla of the region.

IU.com: Then why is it overlooked by the investment media? You never hear about Turkey.

Friedman: The American media is not very good at covering the world. They operate out of stereotypes that are 20 years out of date. For the same reason that the financial media wasn’t very good at covering the financial crisis, they aren’t good at covering this.

IU.com: Let’s turn to a neighbor of Turkey that’s been much in the news: Greece. There have been extensive stories recently about the potential of a Greek default. Is this something investors should worry about?

Friedman: Greece cycles between periods of moderation and periods of problems. They’re in the problem phase right now.

The thing to remember about Greece is that it is a Balkan country. It has far more in common with Serbia and Croatia than it does with its own history. If you want to understand Greece, understand Bulgaria. Thirty years ago, Greece and Turkey were seen as equals; that’s no longer the case. Turkey looms over Greece.

Greece should be seen as a leading Balkan country, and not really as a European one.

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