May 08 2008
Way to Go, Fareed!
Anyone in favor of going down with the ship, raise your hand.
That’s what I thought.
So I suggest you read this excerpt from Fareed Zakaria’s new book called “Rise of the Rest.” You can find it here. And if you’d like to learn more about Fareed in general, his web site is here.
Now before we continue with Fareed, I’d like to draw another piece of news to your attention. It’s about Toyota’s slowdown of U.S. sales — causing the auto giant’s first annual profit decline in nine years.
As you’ll see in a moment, the message shared by Fareed and Toyota will have a profound impact on where you’re going to invest next.
Fareed begins by citing an April poll that revealed 81% of Americans believe our country is on the “wrong track.”
He describes an “atmosphere of malaise” of disruptive forces coursing through the world. Most important, Americans sense that their country is no longer leading the charge into a brave new world.
His laundry list of international innovations makes the entire U.S. look like a rustbelt: the world’s tallest building is in Taipei (soon Dubai), the largest publicly traded company is in Beijing, the biggest refinery will be in India and the largest Ferris wheel proudly resides in Singapore.
What’s Fareed’s point? That the world has shifted to post-Americanism from anti-Americanism.
He backs this up with statistics that say during 2006-2007, 124 countries grew their economies at over 4%.
(By contrast, U.S. economic growth for 2006 was about 3% year-over-year, dipping to about 2½ % year-over-year for 2007, according to the Institute for International Economics.)
Fareed quotes Antoine van Agtmael, the fund manger who coined the term “emerging markets,” as identifying 25 companies most likely to be the world’s next great multinationals. And guess where these companies are based? Brazil, Mexico, Taiwan, India, China, South Africa and few in Latin America.
All of this is heartwarming for emerging-market bulls like me. And if you’re in my corner, the news gets better.
Because on May 8, when Toyota announced its first annual profit drop in nine years, it pointed to the U.S. as the culprit. Then, in the same breath, Toyota acknowledged a stronger shift to emerging markets like China, Latin America and the Middle East.
To quote the New York Times story on Toyota’s earnings: “The shifting emphasis toward emerging markets is part of a broader trend in the industry, and underscores the declining stature of the United States in the global economy.”
So now you can see what Fareed and Toyota have in common as we enter the summer of 2008.
Any rational investor who ignores emerging markets is committing financial suicide. For those of you who choose not to believe me, I suggest you park your butt on the sofa and watch John Wayne re-runs.
– Irwin Greenstein
