Saturday, 25. May 2013 - 16:05
18. 08. 12. - 17:00
Bulls make the real money in the market, so look on the bright side, and to the developing world, for opportunities.
By Clem Chambers, CEO of ADVFN.com and author of investment guides and financial thrillers (www.clemchambers.com) Unless you’re a hedge fund manager like John Paulson who made his fortune betting certain stocks or assets would perform badly, then there are not that many opportunities to get rich with a doom-laden view.
For every ‘bearish’ billionaire – the one who made his cash from being pessimistic about the economy – there must be 100 ‘bulls,’ who got rich with a positive outlook. As such, I’ve decided to look on the bright side. Funnily enough, the market has been making me fat profits in the weeks since I’ve decided to stop cursing the fools who have tipped us all in a ditch. I’m trying to keep it simple. The West, including soon-to-be EU state’s such as Croatia, is getting poorer fast….no, wait, it’s the developing world getting richer fast. In the West, we’re simply treading water.
The West, generally speaking is used to being infinitely richer than the developing world, but the gap is closing somewhat. People in many developing countries where it was previously a struggle just to obtain food and medicine, will soon, if they are not already, be living in nice houses with all the modern toys taken for granted in the West for so long.
That will be a shock to some in the first world, used to going to foreign lands and ‘lording it’ over the locals. When the locals suddenly look to have a nicer life than them, it might come as a blow to the ego. However, it will be good news for humanity. I have been getting peeved because the Old World has been constricting opportunity in developed countries and this is hardly a formula for producing a dynamic economy.
But I’ve now decided the First World is getting what it wants and is leaving the door open for societies that need growth to explode from poverty. A socialised First World lets a capitalist, developing world catch up. Hurrah! Suffering a little recession for a decade or two is a small price to pay to give billions of people the chance to catch up with the pampered West. What’s more, for a couple of hundred dollars I can jump a plane and go play in the global economy; there is nothing to stop me from taking my skills to where the action is. Even the US market is only 5% of the potential customers out there and even measured by GDP the US is only a quarter of the pie.
Right now, there are rallying stock markets in the Philippines for instance and Indonesia, yet it’s easy to not go looking. It’s so easy, in fact, to spend too much time looking down at ones economic shoes to not realise the US and UK market has had a heavy rally. The developed world is bound together in economic lock step.
The underlying forces are the same - trade deficit, fiscal deficit and socio-economic stagnation. Western wealth is being redistributed. It will balance out in the middle somewhere as technology raises all. A tip for success in coming years for the private investor?
Remain bullish. Remember: there’s always an economic party going on somewhere, your strategy should be to get involved.
~Clem Chambers is CEO of leading private investors web site ADVFN.com, offering free real-time market data and charts, and author of A Beginner’s Guide to Value Investing–out now on Kindle. Clem’s latest financial thriller novel The First Horseman, available for pre-order now.
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