The Silk Road to Riches
Dr. Doom, Seer, Realist
In August 2006, New York University economist Nouriel Roubini predicted a subprime crisis and subsequent recession. In September of that year, he burdened a gathering of the International Monetary Fund with his bearishness. And Roubini was profiled in a recent New York Times Magazine feature headlined “Dr. Doom.”
There are important points for the individual investor to understand about Roubini. As he admits, the destruction has been deeper and wider than he originally forecast, and timing and sequence of unwindings this significant are impossible to predict. But he understood the broader issues and their medium-term implications. Sometimes it’s good to pay attention to the “permabear” in the room.
And he also happens to betray some bullishness about the prospects for a recovery and what that global economy will look like:
I expect that the global economy can grow at a sustained rate in the medium term and that the integration of China, India and other emerging market economies in the global economy is a very important and positive trend over time. So, yes there is doom and gloom over the short term; but the medium term horizon will be brighter for the global economy if and when the mess of the current financial and economic crisis is fixed.
It’s easy to set up an American 20th Century/Asian 21st Century debate as a zero-sum game. Even calling it “the American 20th Century/Asian 21st Century debate” suggests more substance than is warranted, that a convenient dramatic flourish sufficiently describes the breadth and depth of experience and interaction among people and nations. The “Thrilla in Manilla” and “The Rumble in the Jungle” are historic fights, but, having not witnessed them in person or been in the ring to experience the blows, there’s no reasonable basis to conclude which was the best ever or the most bruising.
My readers have already seen average profits of 60% from my picks this year, and the best is still ahead of us, but you must act now…
For example…one U.S. global player has more energy reserves than Saudi Arabia and will give you profits of 40-70% in the next 6 months.
Go here and I’ll give you all the details about this stock plus you’ll see my other 10 moneymakers.
Joshua Kurlantzick does the either/or thing right here, in The Washington Post. There are critical facts in the piece, details of past and present political problems that can be woven to predict many future outcomes. But from a broader view, once we cycle out of the current muck, the same supply and demand stresses emerging Asia exerted will tighten back up. Look around: the middle class likes to drive, eat well and be amused. There are a lot of people in China and India, and their incomes are rising.
What seems already underway is a process the end of which will see Asia, primarily, and other emerging markets driving global growth. The US will remain a dominant geopolitical and economic power; it’s still about as big as the next five names on the list (Japan, Germany, China, the UK and France), and nobody can match its military might.
As it was on the way down, as it will be on the way up; there’s no way to say “when” with any certainty, but the best way for long-term investors to enjoy time’s impact on their portfolios is to focus on stress-tested businesses with strong balance sheets and stable cash flow.
Of course, the markets haven’t been able to rally convincingly after the nationalization of Fannie Mae and Freddie Mac as investors try to discount global economic growth going forward.
For now, the prospects are dire and, therefore, the markets are expected to eventually overshoot on the downside.
A lot of investors are just now beginning to comprehend that the consequences of the current turmoil, particularly the loss of confidence in the system’s purported invincibility and superiority, will be long lasting.
As it’s now clearly evident that the system’s checks and balances didn’t work because greed was the primary force and structural finance operated as the magic wand. Unfortunately, most would-be swans have turned into pigs.
True, the Treasury’s plan will allow the mortgage market to function, but this isn’t the same thing as reviving the wild spirits. Weakness in the economy will continue to discourage people from buying houses again in droves; the latest weak labor report is further indication that the consumer recovery is still far off.
No matter which candidate gets into the White House, post election changes to the tax law could wipe out companies' profits and with it, most investors' portfolios.
MLPs avoid taxation, which will shield them from the new tax laws. I’ve selected a special handful that’ll protect your portfolio while giving you returns as high as 43% in a year.
Go here to get my free report and see why MLPs pay much higher dividends –– like 21.1% a year for the past 5 years.
Regarding Asia, its markets have been the hardest hit during the global swoon and should outperform under a rally scenario. Part of the hit can be justified based on slower earnings growth and margin contractions as well as expectations of lower economic growth. But the fact remains that Asia is collateral damage in the context of the great credit unwinding of the Anglo-Saxon economies.
That said, almost every available indicator is undershooting dramatically in Asia and, barring a total catastrophe, the stage is being set for a massive long-term buying opportunity. Asian assets aren’t as cheap as houses in California, but, then again, the growth potential they offer can’t be found in the Governator’s state, either.