CJackson wrote:duetta wrote:CJackson wrote:
Where will the money flow? For years the BRICs were considered growth prospects, but that has shifted. What region or asset class do you expect the next movement towards to be?
Automation and companies facilitating the transition to automation are good bets. Main thing holding back massive automation is the high amount of cheap low skill labor. We are hitting a point though where even the massive increase in low skill labor will not be able to prevent an American transition to automated manufacturing. Careful though as it's not just the engineering skill which is important in evaluating the companies, but their ability to protect their intellectual properties and sell their technology.
World wide we will probably will see income normalization across borders. There's no reason for an American to be earning $50,000 a year when the equivalent work will be done for much less in the developing world. Wages long term will drop for American workers and that isn't necessarily a bad thing for employers. So any company which relies on mid-level skilled employees will become more profitable as they can replace their American workers or at the least negotiate down their wages. We are already seeing this in fields like IT.
Higher income in the developing world will lead to certain asset classes like real estate to increase dramatically as the wages in those areas grow. So higher end housing around those locations would be a safe bet. Countries and cities you aren't even thinking of like Bucharest or Chisinau. Real Estate Investment Vehicles would be a good choice because investing alone in foreign countries is dangerous for the individual. Safety in numbers.
You'll see more sophisticated financial markets in the developing world. In Eastern Europe development projects run into cash crunches all the time and need to slow down or stop completely. Whoever brings western style financial liquidity to those areas will make a lot of money. Same goes for the south pacific region. Big problem there is rule of law and corruption. If you're investing there you need to have a large pool of resources and the ability to influence local politicians. Companies that can not only manage the fundamentals of international investment but can also manage political realities are going to be great candidates for long term investment. The Democrats have been faithful in defending trade deals like TPP which will give our finance companies the protection they need.
America will need to pay interest on its debt and it's been doubling every 8-10 years. America is also rich in natural resources. Look for America to become less of a consumer of resources and more of an exporter. Only way to balance the books long term. So any company that focuses on facilitating the transfer of natural resources from America to other countries is going to be a good bet.
American standard of living is likely to drop so invest in companies that cater to individuals on restricted incomes. The so called top 1% will be fine as their income is derived more from assets, so high end luxury is safe, invest there with confidence. But companies targeting the top 25% will have difficulty selling their goods in the future. Companies like Nordstrom would worry me long term although I like the company under current market conditions. The bottom 70% which has less than $1,000 in savings will begin living lifestyles more in line with what we see consumer patterns in this demographic more in line with less wealthy countries. Cars will be bought less frequently, more multi-generational households, very little long term savings.
China is likely going to continue to be a strong candidate for investment, there's just so much competition to get into China that the investment margins are getting thin. China has made really great inroads with the Philippines which will give them a lot of leverage in extracting resources from the South Pacific sea. The American trump card was always our military, but the American military is getting relatively smaller and weaker while the Asian countries are getting much stronger. America is still going to be the worlds top military power but it will be more like the 2016 Olympics team dominance and not the 1992 Dream Team dominance. I would invest in companies positioned to take advantage of Chinas growing influence. There is a risk of price adjustment in the short to mid term so proceed with caution.
Plenty of opportunities out there. Certainly not the end of the world regardless of who wins the election. That said being in the investment banking industry, I support Clinton 110%. She understands we are living in a global world and that the key to maintaining our influence is accepting this transition and not trying to fight it.
