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catoismymotor (< 20)

Okay, Lets Talk About The Next Twenty Years.

Recs

16

July 29, 2010 – Comments (6) | RELATED TICKERS: EBB , EWZ , EPI

This blog was inspired by TMFDeej’s piece today titled *The Global Demographic Headwind*. He came across an article about how the global population will decline over the next fifty years and what will cause it to happen. Check it out here and give him a rec: http://caps.fool.com/Blogs/the-global-demographic/426410

 

 

Okay, but let’s talk about the next twenty years.

  

China:

 

I would say China is about 1/3 of the way to being tapped out in terms of growth  The middle class will continue to grow, will be increasingly western educated and should gain political power making it a better place to live and do business. After that it will go into a natural gradual decline.

  

Brazil:

 

Brazil has just started to expand their infrastructure. In the short term they are going full steam ahead for when they host the summer games. Hopefully they can sustain some of that momentum afterwards. The middle class is small, but growing. They will, along with Canada, be the world’s natural resource supplier. They are perfectly positioned to feed China’s need for materials over the next two decades. They may even be able to service India as they grow. The main issue I see with Brazil has to do with education. Compared to other developing nations they are far behind. This will limit their ability to grow into high tech sectors. In twenty years I think Brazil will still be supplying natural resources and little else unless they make education a priority.

  

Russia:

 

I have nothing positive to contribute about Putinastan.

  

India:

 

To me they hold the most promise. Like China, they have over a billion people. The government is democratically elected. They have a small, but growing, middle class. The education system is very good. They have highly competitive colleges and universities. A large percentage of the population speaks English. Outside the major cities running water, sanitation, electricity, paved roads, healthcare, banks, cell phones…well, you get the point, are in short supply. They are eager to show the world what they can accomplish. India is ready, willing and able. I don’t think India is going to explode off the block as China did. Being a democracy they are creatures driven by individual wants and needs. Herding cats comes to mind when compared to the general single mindness of China’s population. So I think India will start like a train, building steam and eventually moving forward at a healthy sustained clip. I think India will find itself in thirty years where China will be in the next twenty.

 

 So, is my crystal ball foggy? Would you like to hit me with a fish while calling me a ninny? What say you, the great washed and groomed of TMF? Share your thoughts!

 

He who is 100% invested in that company that sells the plastic swords and umbrellas for your fruity drinks,

Cato

6 Comments – Post Your Own

#1) On July 29, 2010 at 12:34 PM, 4everlost (29.47) wrote:

I don't invest in Chinese or Brazilian equities due to my fear of nationalization.  To me it is another risk factor that is difficult to track and can't be taken into account when evaluating.  I'd like to hear from other CAPpers about nationalization.

I agree with your thoughts about Russia.

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#2) On July 29, 2010 at 12:37 PM, chk999 (99.98) wrote:

I think you are doing pretty good here. Australia will do well based on its natural resources and Haiti will be a basket case.

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#3) On July 29, 2010 at 8:54 PM, ChrisGraley (29.89) wrote:

That all sounds about right, but I'll throw in a few monkey wrenches...

China has the mother of all housing bubbles right now.

Brazil is dependent on exporting to China.

India can't seem to control government corruption.

Australia loses if China goes south as well.

Canada gains if China goes south compared to the other commodity nations. It's all about location.

Greece is screwed for the next few decades no matter what. 

 

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#4) On July 30, 2010 at 10:38 AM, vriguy (76.68) wrote:

To mix metaphors, ChrisGraley has hit the nail on the head with his monkey wrenches. I am still pretty optimistic about the US compared to the BRICS.  Settled and stable rules of law, contracts, and property rights constitute a real competitive advantage for the US in the long haul.  Canada, Australia, NZ, etc. share this US advantage, and have abundant natural resources to boot, making them perhaps a better bet than the US.

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#5) On July 30, 2010 at 11:45 AM, catoismymotor (< 20) wrote:

Chris & Vriguy,

Thank you for your input.

I was once very bullish on Brazil. I owned some EWZ, but sold it as the market started to tank. I thought about buying it again but decided not to after re-ecaluating the way it was structured and discoving how the government like to nationalize stuff. I added EWZ to my "Maybe Later List".

At one point I owned a number of Chinese small caps. I sold most by mid Summer of 2009 having doubled my money on 75% of of them. I was very happy with the profits. I decided to go long with NEP and CGA. I ended up selling out of those earlier this year after reading a re-reading news about China that was making me feel really uneasy. I blogged about my experience with those two in the past few months. At some point I may look at a China ETF.

I never thought twice about putting any money into Russian stocks. Their government really needs to take some notes from China.

India, as I talked about above, in my opinion holds some great promise. I will not go over that again since it is a simple task to scoll upward to re-read it. I think it is funny that in two hundred years of occupation all England gained culturally from India was tea. And poor India gained bureacracy. I do have my eye on one particular Indian ETF. I am going to buy into it I will wait until at least November. I am expecting the market to drop later in the year and want to catch it on sale if I can.

Chris, what I posted was a general forecast as seen by me as to how the BRIC countries will fair over the next 20+ years. None of my crystal ball gazing has to do the near term.

vriguy, at this time I think the U.S. has hamstrung itself with complicated, redundant laws and debt. I think we will lose ground over the next ten years if something is not done. I don't see a big enough change on the horizon to resolve the problems. I would rather put my money into a Canadian company than one in Australia or New Zealand. Canada has a gowing immigrant population, natural resources out the wazoo and a banking system that is conservative as they come. Hence why I have so much of my IRA in Canadian companies. Australia is undergoing a great deal of financial hardship because no one is buying theor natural resources, is scrambling for ways to raise tax revenue. They have made made noises that scare business owners and investors. Not good. And New Zealand is too small and unagressive with regard to economic development for the likes of me. As to the "rule of law": it means nothing to those that choose not obey said law. Crooks are crooks, will find a way to pick a pocket no matter how much you legislate.  And they can be found all over the world. Here, where we have the rule of law Madoff, Boesky, the Wyly Brothers and Enron did as they pleased. If this can happen here it can happen anywhere. Even in China where they put frauds to death. "Yo-ho-ho! And a bottle of Pepto!"

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#6) On July 30, 2010 at 3:28 PM, catoismymotor (< 20) wrote:

I just read what I typed in #5. I wish I was better with the typos.Sorry, folks.

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