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How to Invest and Make a Fortune Trading the Americas
By Tobin Smith, Editor, ChangeWave Investing
The global investing trend is puttering out, and I see the next big thing as what I call the "America trade," i.e., investing in North and South American stocks. Here's some helpful advice on how to invest in the Americas and make a killing!
For quite a while, U.S. investors seeking advice on how to invest have been told to "go global." The belief was stronger growth and higher returns resided in foreign markets. We listened and dumped billions of dollars into international stocks, mutual funds and exchange-traded funds (ETFs), which have outperformed during the past seven years.
But, as the saying goes, "What goes up must come down." The eggs of underperformance were laid by the over-performance of Chinese, Indian and European stocks. All good things must come to an end, my friends.
I say it now: The time of shorting domestic stocks and going long in foreign markets is over.
The global markets peaked in late 2007, while the United States -- the base of the subprime nightmare -- has seriously outperformed some of last year's hotshots.
Why are domestic stocks a better investment?
Domestic stock averages have lost much less than their major European and Asian counterparts in this global bear market. The six-year run in which the foreign market routinely destroyed the S&P 500 (SPX) and the Dow Jones Industrial Average (DJI) has come to an end.
Once everyone has caught onto a trend, it no longer works. I'd say the trend is doomed when everyone and their grandmother has a lion's share of their money in a 401(k) plan in foreign markets. Their first quarter 401(k) statements are going to be painful. Certainly not as bad as the Nasdaq meltdown in 2000, but it'll still hurt.
How to Invest in the Great American Stock Comeback
Yes, international stocks have outperformed, but I believe their heyday is over. It's time to start investing in North and South American stocks.
Why am I so bullish on the Americas?
As a nation, the United States accounts for about half of the world's profits and its stocks encompass over 41% of the world's stock market capitalization. Additionally, much of the U.S. growth companies' revenue originate in international sales.
Don't forget about Brazil, Canada and Mexico. These are the world's best performing markets (along with the United States). See a trend? They are all in the Western Hemisphere. Last year's stars from the east -- Germany, India and China -- are hurting.
And you can forget about blaming this on the weak dollar -- it's not a factor. The international markets are down 20% across the board in their own currencies.
Consider China for a moment.
A good piece of the profits reported last year by publicly-listed companies in Shanghai came from stock-trading gains. So, when the China bubble burst and stocks went south, so did these companies' profits.
Add to that the fact that inflation is out of control and ready to detonate China's growth bubble.
I really think this will be the year people around the world finally see China for what it really is--a communist-controlled nation with a pretty veneer of Hong Kong and Shanghai but otherwise:
1. Stands as the world's biggest pollution offender
2. Will run a 10%-plus inflation rate without gasoline price supports and food rationing.
3. Boasts 16.6% of its citizens living in dismal poverty, according to the World Bank.
4. Is headed for a meltdown with widespread unrest and riots outside the sprawling cities.
Look to the West
The world's problems will not be solved by countries like China or India. The answers are coming from the Americas.
Consider this:
1. The first energy-independent economy of the 21st century belongs to Brazil
2. The resources to knock Saudi Arabia out of the #1 energy exporter spot lie in Canada
3. The technology, education, capital system and entrepreneurial spirit of the United States will serve a significant role in solving the 21st century's largest problems.
The "America trade" is what you want to be invested in as we come out of this bear market. There's big money to be made in North and South American stocks that sell their products and services throughout the world.
Global trade is dead for now. Long live the American trade!
P.S. The heyday of the emerging markets in China and other developing countries is over for the time being. All investors can look forward to is further downside. Now is the time to be placing your money in the best secular growth stocks North and South America have to offer. Which ones? Try ChangeWave Investing risk-free for 90 days to find out.
Comments (1)
ahknaten![[TypeKey Profile Page]](http://blogs.investorplace.com/nav-commenters.gif)
:
Tobin,
It was nice listening to you at the RISE conference in Dayton. =)
Posted by
ahknaten |
April 9, 2008 1:21 AM
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