Postcards from St. Kitts: Can Decoupling and Globalization Coexist?
Over the past few days I have been enjoying the collective investment wisdom from dozens of expert speakers here at the Sovereign Society Emergency Money Summit on beautiful St. Kitts. These guys are sharp as tacks: investment and asset protection experts from countries around the world.
I don’t agree with everything I have heard of course. After all, that’s what makes it a “horse race” – but more on that in a minute or so.
I have heard a number of intriguing ideas that reinforce my own views on where in the world to find great investment opportunities right now. So first, I'd like to share a few of these highlights with you, since I believe they're right on the money...
Go Green for Big Gains
Thomas Fischer of Denmark- based Jyske Bank pointed out the huge profit potential in “green investing”. This is a great long-term theme that I believe in big time. In fact, I devoted an entire investment report to green energy investments.
It was Thomas who brought Vestas Wind Systems to the attention of Sovereign Society members. This leading windmill maker doubled in price both in 2006 and again last year!
After the recent correction, many alternative energy stocks look attractive again. With oil above $100 a barrel, there’s sure to be lots of money flowing into this sector. This is one area to keep a sharp eye on.
Long Term Bets on Health Care and Infrastructure
Daniel Zurbruegg of Swiss-based Alpine Atlantic Asset Management focused on two investment themes I believe have lots of long-term potential. He pointed out that global health care spending is set to triple through 2008, due to an aging world population.
Also, infrastructure investment is another hot topic. Spending on the bricks & mortar and the nuts and bolts of modern society is expected to double in the next decade according to Daniel. That’s another great investment theme I plan to explore much further this year.
Back to the subject of “decoupling”: one speaker claims that there’s no way you can have decoupling AND increased globalization both at the same time. Now that's a subject I'm well versed in -- and I totally disagree – here’s why…
Decoupling is About Long-Term Fundamentals Not Short-Term Market Fluctuations
Emerging stock markets declined late last year and in January 2008 right along with the U.S., Europe and Japan... so much for “decoupling” say the critics.
But decoupling was never a term meant to describe short-term investment returns. We all know that in the short-run, manic-depressive investor psychology and sentiment always rule over long-term fundamentals.
Instead, the proper definition of decoupling is the idea that emerging markets have grown up, and are now capable of standing (and running) on their own economically – even without the support of the American consumer.
Last year for the first time in history, the BRIC countries (Brazil, Russia, India and China) collectively accounted for more than half of total global economic output growth... now THAT is decoupling at work!
Of course the emerging world will slow down too if the U.S. or Europe heads into recession. But it won't be anything like the magnitude of the slump we're seeing at home. I believe the long-term fundamentals driving BRIC performance remain intact, in spite of short-term market volatility.
As you can see in the chart, aside from China’s sharp correction (after doubling last year) the other BRIC countries are all performing very well since October – during the worst of the global sell-off in stocks.
These economies will continue to grow and expand supported by much stronger long-term fundamentals. The investment opportunities in the developing world are simply much greater than you’ll find in the U.S. To find out more about where in the world I'm finding particularly good investments these days, Click here to sign up for a risk-free trial to Global Market Investor so you can get a peak at my recent picks.
After seeing your comment about Vestas Wind Systems, I thought that you and your readers might find my website useful.
After some forty years of following socially responsible investing, I now have on my site the latest global news and research on green and socially responsible investing. The site is at http://investingforthesoul.com/
Good luck and best wishes, Ron Robins
Posted by: Ron Robins | February 23, 2008 at 10:42 AM