So where do you invest now?
One approach is to look for emerging social trends and climb aboard. By investing in companies that cater to a growing market, you can start small and watch your investment grow over time. T. Rowe Price developed the discipline of “growth investing” some decades ago, and it is still a valid approach.
What’s growing today? One such trend is the expansion of the global middle class. As China, India, Africa, and Brazil develop, billions of people are moving from living hand-to-mouth to having aspirations and plans. When people move from a subsistence lifestyle to working in a factory, unquestionably their income and wealth rises.
This will bring with it all kinds of new needs—needs for improved communications, benefiting cell-phone providers, needs for improved diets, benefitting food-processors, needs for improved transportation, benefitting auto and airplane manufacturers. Investing in companies that provide these kinds of goods and services in the developing world could add real return to a portfolio.
But be careful! Today’s hot topic can quickly become last week’s lunch. Diversification is important. Riding a global trend is exciting, but you have to be able to stay on board when the going gets rough.
Douglas R. Tengdin, CFA
Chief Investment Officer
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