Presently, about 1 billion out of the world’s 6.5 billion people are active participants in the global economic system. By 2050, we expect there will be 2 to 3 billion out of a world population of about 8 billion who are frequent consumers, savers, and investors.
There is a new industrial revolution taking place, resulting in the addition of billions of people to the global economic system. Howtoinvestglobally.com is where investors can learn about many of the economic tailwinds, trends, and global developments that are creating investment opportunities.
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THE DOLLAR FELL IN 2009
In 2010, we expect the U.S. Dollar to fall against the Australian Dollar and other commodity-related currencies, but rise against the Euro and the Japanese Yen.
We see the world markets in 2010 as having three overlapping phases.
More... Posted On : Friday, January, 15, 2010 MORE FOR 2010 Author's: Monty Guild & Tony Danaher
“If a man empties his purse into his head, no man can take it away from him. An investment in knowledge always pays the best interest.”
- Benjamin Franklin
LOOKING AHEAD AT 2010
We believe that 2010 will hold many opportunities for the global investor as the continued improvement of business conditions will translate into higher equity and commodity markets. Expectations of rising inflation will drive capital into commodities and into fast growing countries, industries and companies.
As people become more confident of economic recovery, they become commensurately more frightened about inflation. As inflation fears escalate, desire to hold dollars dwindles.
We are adding to our positions in the following areas: producers of food, gold, and oil; exporters of high tech products and services; manufacturers of machinery used to produce commodities, such as mining, farming, and oil drilling equipment and services; and producers of machinery used to build manufacturing facilities; and machine tools.
The same macroeconomic conditions that create opportunity also create risk. As the markets begin to discount higher inflation and higher interest rates, some investment choices are better to avoid, such as long term bonds.More...
WILL HISTORY REPEAT ITSELF?
The Resolution Trust Corporation (RTC) was the organization created to clean up and liquidate insolvent savings and loans during the last major U.S. real estate crisis in the late 1980’s and early 1990’s. We predicted the coming of a new RTC-like organization over a year ago. That prediction has materialized, as the Federal Deposit Insurance Corporation (FDIC) is now undertaking the same role played by the RTC twenty years ago.
Let us examine the parallels to today. In the late 1970’s and 1980’s, the real estate finance industry was a big donor to politicians in the U.S. Congress and to the executive branches at both state and federal levels. After a decade or two of influencing legislation in their favor, too much power was in the hands of the savings and loan industry. This led to abuses in banking and real estate finance that created the savings and loan crisis, and the failure of over 700 institutions. The government’s plan to resolve the crisis called for the formation of the RTC to manage the liquidation of bad saving and loans portfolios, and the taxpayer picked up the bill for the losses.
Today, the banking industry, especially the Wall Street branch of the banking industry, is the big donor to the legislative and executive branches in state and federal governments. Will history repeat itself with a few variations?
Already the taxpayer has been asked to contribute hundreds of billions of dollars. The derivatives crisis still continues. The underlying culprit behind the banking crisis, unregulated derivative transactions, continues unchecked. It remains to be seen if the power that the banking industry currently holds will result in further problems for the economy, financial markets, and the taxpayer. Many experienced observers believe that there is a strong possibility that another and much bigger crisis will develop.
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Theme #1 – Equities will outperform early in 2010
We believe that new money will flow into stocks for at least the first few months of 2010. Like most professional investors, we see stocks as the most attractive investment option for 2010.
Let us look at the alternatives to stocks for investors. In an environment where inflation is starting to resurge in many countries, bonds are in danger of declining in value as inflation pushes long term interest rates up in 2010. Due to overleveraging and excess inventory, real estate is doing poorly in Japan, U.S., and Europe. Collectibles are not in demand. Private equity has performed poorly. Globally, stocks and commodities are the investments of choice as we enter 2010.More...
THE U.S. DOLLAR RALLY HAS BEGUN
We recently wrote that the U.S. dollar could begin a rally after the New Year. It appears the rally has arrived three weeks before we had anticipated, and we expect the rally to last into 2010.
How long the rally continues will be determined by the magnitude and pattern of the rally now underway. In the current dollar rally environment, we do not anticipate that gold or oil will move much higher. We do not see them as vulnerable to a major decline. We expect them to trade in a range, resting for a while until they begin their next assault on new highs in a few weeks or months.
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