The Rise of the Rest

One great thing about my position here as Director of Marketing is my extensive contact list. I say that because I have access to thousands of excellent traders, investors, and economists at my finger tips! So when things around the world catch my attention, I can quickly find someone who can give me the skinny on what's really going down. One of my contacts is Nicholas Vardy, Editor, The Global Guru, and he's got a MUCH better pulse on the world aboard then I do. That's why I asked him to give us his reasons why the markets outside the US are doing so well and WHY!

He told me he'd love to get feedback from the Trader's Blog readers, so let's not let him down! You can also visit The Global Guru to get his new report on his favorite global picks.


Make Your Fortune from the "Rise of the Rest"

The inevitable decline of the United States is now firmly part of conventional wisdom. The profligate-spending Obama Administration -- consider that the $1.42 trillion U.S. budget deficit in 2009 is bigger than the entire economy of India -- and its efforts to transform the United States into a European-style socialist democracy marks the death knell of what was once a great country. The future belongs to China and the rest of Asia. "Old Europe" is a living museum that barely merits mention.

Yet, the future is likely to turn out very differently from the way we expect. After all, over 70% of predictions in John Naisbitt's classic book "Megatrends" were wrong. The "decline of the West" may sell newspapers both at home and abroad. But the tectonic shifts in the global economy were better described by Fareed Zakaria in his book "The Post American World" as the "rise of the rest." Economics is not a zero sum game. Selling new members of the global middle class GM cars, Coca Cola, and the latest iPhone offers U.S. companies their greatest profit opportunities in 50 years. Understanding the dynamic behind this historic global shift is the key to focusing on the best investment opportunities over the coming years -- no matter where they are on the globe.

Follow "Old Europe"?

The "rise of the rest" is a shift of historic proportions. Thirty percent of the world's population resides in emerging markets. China, India and Brazil have a combined population of more than 2.6 billion people, many of them young and increasingly affluent. Meanwhile, far smaller populations in Western Europe, Japan and the United States are aging. Twenty years ago, emerging markets were cheap producers of goods to sell to Americans. Today, they are potential customers for American products and services. The rise of the global middle class may be the savior of American manufacturing.

And this isn't just a pie in the sky prediction. China's car market today is bigger than that of the United States. GM, once the very icon of American manufacturing, produces more cars in China than in the United States. Imagine what happens when China becomes the world's biggest consumer of Coca Cola, iPhones and Microsoft software. China's consumption will unleash a boom for U.S. multinationals.

Jeffrey Immelt, GE's chairman, argues that this shift in the balance of consumption power calls for a new business model. The products of the future will be designed, built and marketed in local markets. Yes, GM's car sales in China are booming. But the vehicles are made there with a Chinese partner. Applied Materials Inc., the Silicon Valley equipment maker, makes its solar panels in Austin, Texas, and develops silicon equipment at its headquarters in Santa Clara, Calif. But Applied Materials is also opening a solar research and development center in western China. It's the size of 10 football fields and will employ 400 engineers.

But Jeff Immelt's characterization of a "new business model" must bring smiles to the faces of his counterparts in "Old Europe." Spoiled by one huge domestic market, many U.S. companies are behind the curve. (GE itself is an exception.) European multinationals like Nokia, whose market share of global cell phones stands at over 37%, are global from Day One. How can you not be when your home country of Finland has a population roughly that of Manhattan? Ditto for others like Swedish-Swiss infrastructure giant ABB, which expects to make more money in China than it ever could have imagined in tiny Switzerland. U.S. companies are catching on. S&P 500 firms already make 48% of their sales abroad. But a similar number for U.K. companies is 80%.

Change Is Hard, Not Changing Is Worse

Change is painful. The American economy has lost more than 2 million manufacturing jobs in the current recession. Many of these will never come back. Consider that in 2004, GE had 165,000 employees in the United States and 142,000 abroad. By the end of 2008, the ratio had been reversed: 152,000 in the United States and 171,000 abroad.

Loss of U.S. manufacturing jobs is a tough issue. Outsourcing, U.S. tax policies and a weaker dollar are all issues that raise political hackles. But consider the alternative. In the 1970s, the U.S. steel industry imploded and shifted overseas. In contrast, the automobile industry held on tooth and nail. The result? Pittsburgh hosted the recent G-20 summit to highlight to the world on how a city successfully adapts to change. The former U.S. Steel building in Pittsburgh now boasts a University of Pittsburgh Medical Center (UPMC) logo. In contrast, Detroit, the beneficiary of huge government bailouts, is a study in abject failure.

How You Can Profit

Emerging markets account for 30% of global GDP and are responsible for a higher percentage of global growth than the United States and Europe combined. Templeton's Mark Mobius has said China's stock market may surpass the United States as the world's largest by value in as little as three years. Yet, the average U.S. pension fund allocation to emerging markets is 5%. Meanwhile, U.S. markets have been flat over the past decade, even as emerging markets have tripled in value.

The portfolios of my clients at my investment firm reflect this new reality. Less than 15% of my clients' assets are in U.S. or U.S. dollar-denominated assets. And that's not because I have an axe to grind with the U.S. I simply see the best opportunities in global markets. And today, you, too, can invest in the world's top multinationals like Nokia (NOK) and ABB (ABB) -- or the world's fastest-growing markets like China (FXI), Brazil (EWZ) and India (INP) -- at the click of a mouse.
It's the single best way you can profit from the "rise of the rest."


Nicholas A. Vardy
Editor, The Global Guru

P.S. Emerging markets is just one area that is hot right now. You can start profiting from these and other global markets right now, when you download your free copy of my special report “Top 3 Global Picks to Buy Now”.  And these are set for even bigger gains over the next few months.

22 thoughts on “The Rise of the Rest

  1. Hi,

    I am just wandering if to join that "ellite of inverstors". However... To give $1000 to someone unknown without ANY KIND of agreement... It's not that convincing. And also if someone is really serious that he would also mention couple of his failed predictions. I mean noone is perfect. And - I'm sorry - but it really smells like an easy business. $1000 from 1000 users is... 1 milion dollars. For a promise. Without any agreement.

    Could be a little bit more convincing than just a flashy/colorful webpage saying "We make you a millionair".

    However just the recommendation from alone is already worth something.

    Well Nick. You have an unconvinced potential "victim" here. Give a little more out of yourself... 😉


  2. When the United States pulls out of NAFTA and begins to control imports again then that will be the turning point of this economic downturn. We are in an economic famine and if continued will result in the depopulation of this nation. This nation will become a skeleton of what it was. Every administration since Ronald Regan has been involved in this agreement. Democrats and Republicans were both involved. Strengthening the rich by condemning the poor is socialism in its greatest form. When the US government chose to give billions to the banks and a very small portion to the taxpayer, The greatest socialistic move ever made by this government was implimented. I strongly agree that a shift of consumption will be placed in China, India, and many Third World Contries. These Emerging Markets will be the most important markets to watch for moneymaking opportunities. The dollar will continue to decline against these currencies. Gold will continue to rise. Oil will be choppy because as the US demand falls, other nations demand will rise. We are seeing a global shift in wealth from the US to other nations. All of this was caused by NAFTA and the economic agreements made with other nations. These agreements gave businesses an insentive to take their business to other nations because of cheap labor and a favorable currency to work with. The US will move from blue collar workers to white collar workers, and anyone left will become servants to the white collar society.

  3. Your first paragraph says it all. The US President and his Team are actually out for the destruction of the US.

    He was brought up with the ideas put into his head to destroy the Free Enterprise System as we know it.

    His czars are as radical as he is.

    He said he was out to "re-make" American and this is exactly what he is doing.

    The US Market has no reason to be where it is and it will get worse.

  4. The reality is that the BRIC countries (Brazil, Russia, India and China), plus South Africa and Mexico among others, are challenging as a group the economic and political leadership of the G7 countries.

    In spite that the emerging countries have a much lower income than the developed countries, they are still making lots of babies to sustain their economies, which is not the case for Europe, Canada or the US.

    So in the long run, one of the ways by which developed countries can sustain their aging populations and government revenues is by allowing immigration from less developed countries.

    In pure economic terms, the companies in the US and other developed economies need bigger markets with growing populations for their products and services, thus obtaining higher earnings to attract investors locally or from anywhere in the world. And this is becoming a two-way process between the economies of the developed and less developed countries.

    For example, China is moving from supplying equipment to building energy parks in the US and financing them.

    See the following link:

  5. when america sneezez the world catches wonder the flu,well to me --this present economy situation- is this not an attempt to distract and suddenly brings dollar back stronger?when we would have gone far? let us watch our movement dont go too far please you may have to come back-dollar-wise-















    1. Hugo,

      Thankd=s for your feedback.

      The key is to focus on a few markets and get them right. The markets should be big and liquid. Once you do that and emply money management stops you will be on your way.

      You might want to look at this blog posting on stops.

      All the best,

      P.S. Hugo, you may want to consider using lower case when you comment. Many folks think you are shouting when you use all caps.

      1. Thanks Adam.....
        and thanks also for the tip. I hadn't realized that my caps were giving the wrong impression. No wonder no-one was answering me.

        Thanks again for the info; it's useful.



        Is anyone else suffering from the 9 to 5 syndrome and missing profits because of it?

        What to do about this? any tips Adam??

        Thanks again.


  7. Good to see some realistic investing. Thank you for this confirmation as I have been watching this global shift since 2003, not that it started then. It appears as though many in the west still do not accept it and instead want to bicker about which puppet administration is the cause when the puppet masters have been the same throughout. Appreciate the valuable sources and tips. Personally, I'm heavily into precious and base metals but may expand my horizons. Thanks much.

  8. That is amazing stuff.
    How can a guy like me invest in these companies when i live in Canada?
    Also is not the USD going down so if i invest from here and covert to USD and the stock goes up but the dollar comes down where do i make the money?

    1. Open an account with a brokerage firm in Canada and you can buy shares in dozens of global stock markets across the world. They are also likely to be the cheapest.

  9. This ideologue's comments are a waste of time. If this is the best this site can do then it is a waste of time. BYE BYE

  10. Why is everyone blaming this horrible deficit that we're now suffering from on the Obama administration? Why don't you tell the truth? When Clinton left office we had a big surplus. Then Bush and Cheney got us into this horrible mess from which we may never survive, even though Obama is trying very hard to bring uis back to life and save our economy. We could certainly bring back our work force if we spend our money in rebuilding our infra-structure. We need better roads, safer bridges, a better electrical system. We need government money to help rebuild these items. The big banks have been saved. Why aren't they lending the money they now have in profusion to the municipal and state
    authorities to put people to work on this essential rebuilding of our infra-structure. Has anyone driven in the street of any large city lately? Even in Berkeley, California, the streets are almost jagged everywhere. How about what happened to the Bay Bridge? Lend the money banks, and let the work force increase!!!

    1. I generally agree with Perry S's comment. Well thought out, and dealing with the realities of our the situation in the US, rather than the wide-brush stupidity expressed in the article. Re: The article, it presents pure RAH RAH US-BASED IGNORANCE-typical of a majority of US views, unfortunately--ascribing US behaviors to the rest of the world!!! How about the comment on Europe!!! So easy to just BASH, with NO FACTS of course. Has he ever been there/lived there (besides hanging out with like-minded US Euro-bashers)? Laughable.

      Please give us a break! and STOP giving IGNORANT commentators a voice to propagate their self-centered-US-VIEW of the world. The pettiness and spite which come along with it we can do without.

      1. Just FYI, I've lived in Europe since 1991, and speak 5 languages.

        Read the article. The comment on Europe was a positive one, saying that they are by necessity and experience more suited to the marketplace than their U.S. counterparts. How is that "BASH"-ing with "NO FACTS"?

  11. If China westernizes to the point of debauchery and decay that materialism led us into, it won't rise for long. If China consumes more of the Coca Cola poison than we have, disease will appear in ways the Chinese people have never experienced! If China puts more cars on more roadways than we have, WE will experience increased toxicity of America's atmosphere.

    Let us pray that their discipline as a people averts that self- destructive path--for their sake, AND for ours. In terms of impact, China's could be enormous, for the quality of environment remaining is far less than when began our ascendancy.

  12. The reason why markets outside the US are doing so well is because a country's growth is stimulated by the population of it's work force. the US work force is ageing and declining, which lessens/changes our useage and need for goods and services. also the US is not a global producer of the commodities that are needed for infastructure build out and other forms of growth; much unlike other developing nations, who are clear leaders in exports needed for growth. and these developing nations are growing at a rate of 2-3 times faster than the US; their growth will continue and ours will decline, not to mention the fact that they face a far less severe financial situation than we do here. ths US simply must survive for now until our workforce begins to grow again.

  13. The Global Guru's arguments are somewhat underwhelming for someone with such a pretentious title.

  14. I was astounded by the examples chosen as representing the products that the Chinese would like to buy from the USA. About the iPhone, my internet search for a smartphone a year or so ago discovered phones from China with many of the touch screen features of the iPhone plus the capability to stream TV and to use two SIM chips concurrently. They were priced about one quarter that of the original iPhone. The biggest cellphone network in China now has more paying customers than there are people in the USA. As to Microsoft software, can you name a single product of theirs that could be called the best-of-the-best? Cannot comment on Coca Cola but I know from my visits to China that they drink a lot of beer and tumblers of Scotch and/or brandy with their meals much like the Russians and their vodka.

    As to GM, the Buick that is assembled in China is considered the same build quality as a Rolls-Royce and is highly prized as a limo. they assemble BMWs there as well.

    A good friend who worked 15 years in mainland China and was awarded the China Friendship Award (the highest possible award to a non-Chinese) says that Chinese promise their children that their grandchildren will all have American household servants.

    Not a lot of warm fuzzy feelings there. A tough market to penetrate.

  15. Thanks for your article. Before one jumps off the US bandwagon please consider that economists are always basing their analyses using Gross Domestic Product as the main criteria. Business leaders and investors on the other hand consider Gross Domestic Profits. A much more important determinant of wealth.

    Consider that while the Asian economies better themselves with low wage jobs producing products sold back to the US consumers, they do so at almost no profit. These companies have extremely low margins.

    Now compare to Intel/Microsoft/Apple etc who get the vast bulk 95% of the profits made. These profits accrue to the US but create the so-called deficit that the economists are so concerned about.

    Investors are more concerned about profitability - which has not been the hallmark of the low-wage manufacturing countries. They have a hard time building infrastructure when their profits are too low to support it.

    When the foreign companies and owners do save money, they ultimately invest it back in the US in the very companies that gain the most. This leads to a rise in stock market prices and wealth building for, who? Americans.

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