Macroeconomic Insights – Page 2

Moving With The Emerging Markets.

Deciding where to invest abroad can be as confusing as figuring out the color of the dress (‘that almost broke the internet’ – USA Today) this week. If everyone thought the same way, there’d be no debate, no marketplace, and no room for improvement. However, for the dress, there was a science behind the reasoning – while for understanding the financial markets, we look at economics – a social science, in which other than just supply and demand, the interaction of humans in society is what drives the result. That same concept provides an interesting question – are we able to note what international regions are making the right decisions for the future – before other investors? We’re projecting some outperformance from a set of emerging markets in the coming years. Stay with us:

The 2000s was a decade undoubtedly ruled by the BRICS (Brazil, Russia, India, China and South Africa) – a group of countries filled with untapped resources, aspirational workforces, and insufficient capital and infrastructure at the start – meaning there was significant room for investment. Goldman Sachs’ Jim O’Neill coined the term ‘BRICS’ in a landmark paper promoting them in 2001 – and consequently delivered one of the best projections in Wall Street history. This set of countries led the world’s growth, and gave a cumulative stock market return of over 420% from 2001 to 2010, compared to a 44% gain for the MSCI All-World Index and approximately 15% for the S&P 500.

So, does the credit all go to the fiscal and monetary heroes of these nations, that took the baton and ran with it for 10 years? Definitely, much of the progress came from the policies they implemented. But we believe there’s one factor that doesn’t get enough credit – a factor which the BRICS themselves didn’t have much of an influence on. And that’s the US interest rates.

Step back into 2001. The US was gathering the pieces from the technology bubble bust – and to help, the Fed stepped in and reduced interest rates from around 6% to below 2% – rates not seen since the 1950s – to get the economy back on track. Consequently, capital fled the US in search for yield, and with the BRICs positioned perfectly to greet it with the situation described above, came the outperformance. As the US’s consequent economic boom via consumption fueled Chinese manufacturing, Indian outsourcing and commodity consumption from Brazil and Russia, the BRICS were able to withstand the Fed’s rate increases from 2005 towards 2007. Consequently, the 2008 recession occurred, and we’re now somewhat back to square one, with even lower rates than 2002 and a much weaker global state than in 2006.

So, the real question is – which emerging countries – BRICS and beyond – took advantage of the capital rushing to their borders in the 2000s, and invested it wisely for the long term? Which countries shored up their infrastructure, delivered structural reforms, invested in education, privatization, and transparency to ensure that when the rates did go up, they’d be in good shape? We worry that Brazil and Russia did not take advantage of the cheap capital inflows to implement significant structural reforms, and China’s growth will continue to slow unless it starts focusing more on domestic consumption and promoting free markets. As they do, of course, we’ll revisit them. But in the meantime, in our opinion, the BRICS as a package deal is over – and the importance of the EEM index as a whole is diminishing. If we want exposure to the developing world, it’s time to be a bit selective.

So, we decided to screen the following factors to determine the next set of countries to outperform the world: demographics, primary contributors to GDP, global competitiveness, the orientation towards free markets, and leadership objectives involving private investment, foreign capital incentives, and smart government spending. We find Indonesia, the Philippines, Malaysia, India, and South Korea to fit the criteria for investment along with Mexico and Nigeria, and believe these are the countries to watch for the next decade. Indonesia has rapidly risen to 38^th from 50^th in the Global Competitiveness Report by the WEF in just 2 years. A young population with a highly educated workforce, driven by technology, favors the Philippines and India, along with infrastructure-driven governmental spending and foreign reserves. Mexico has rapidly reformed its manufacturing sector to take advantage of international consumer discretionary spending, and South Korea remains coupled with (solid) US growth due to its export-driven economy. Nigeria, despite regional instability, has the fastest growing large African economy and population – we find this to be a very attractive entry location for the likely emergence of the continent in the coming years. Meanwhile, note that Wall Street’s joining the party – with MINT, TIMPS, and other acronyms slowly making their way into research reports, and replacing BRICS as the next set of world outperformers. We believe there’s plenty of room for everyone on this ride; it’s worth allocating a bit of your money to ETFs that provide exposure to these countries for a 5 year horizon.We’ll be speaking more on this subject in the coming weeks.

What it means for you: Given the impending US interest rate increase, we felt it was worth reflecting on the case study of the BRICS – and the highlighting the importance of understanding the drivers of any investment’s performance, rather than the performance itself. Today’s globally connected economy brings influences outside individual nations’ controls – and the ones that take advantage of them with a long term, visionary approach, are the ones you want to invest in for the coming years. Similar principles are applicable to single stocks as well. Refer to our column on ‘Keeping It Real While Investing’ for our thoughts on blending passive and active investment distribution, and think about allocating a bit of capital to the countries mentioned above in the coming weeks to benefit from the structural progress of the emerging markets.

Neel Kulkarni March 1, 2015 Macroeconomic Insights Read more >

Staying Ahead Of The Street.

You’re probably exhausted of hearing the words ‘interest rate hikes’, ‘Greece’, and ‘crude oil prices’ over the past few months. Fear not, we’re all pretty much in the same boat. Unfortunately, with all 3 subjects in the hands of policymakers, the outcomes can be influenced only to an extent by free markets (sure, oil prices remain low due to the excess of supply over demand, but it’s something Saudi Arabia could influence very quickly if it decided to deviate from the waiting game with US shale players). So, let’s look into some less-covered financial facts that are worth another glance, and at the end, discuss what they mean for you as we enter February’s last trading week:

1. Fundstrat’s Thomas Lee recently pointed out that the percentage of US accumulated depreciation to gross plant assets is now over 50% in the S&P 500, for the first time in history.

Whether capital expenditure will increase this year is one of the two compelling questions we’re watching for in 2015. Such statistics further our belief that it’ll happen sooner than later – companies can’t just keep depreciating their assets forever. So it’s a question of ‘when’, rather than ‘if’, they’ll start spending. And ‘when’, in our opinion, is contingent on whether a potential global economic slowdown later this year deters US corporations from spending their cash. We remain optimistic that they will.

2. With January’s employment report, the US is now down to a 5.7% unemployment rate – ‘among the lowest in the club of [rich] OECD nations’, as stated by The Economist. In fact, the publication goes on to state ‘at last, a proper recovery’ for the United States, where ‘all sorts of Americans are feeling more prosperous’.

The last sentence above is key, with the average weekly earnings in January showing the biggest increase since mid-2011. More people are finding employment, and therefore, can spend more, along with increasing wages. Also, remember that they’ve got approximately $750 more in savings for 2015 due to lower gas prices, per the US Energy Department. We’re pretty happy with the US economy’s progress and growing discretionary spending potential, especially considering the bleak international outlook. It remains a safe, competitive, and growing economy where we believe the investment reward is well worth the risk in the long term.

3. The number of private equity funds is at an all time high, according to Palico, an online private equity marketplace (highlighted by CNBC). And according to the WSJ, there are now at least 73 private tech companies valued at more than $1 billion, compared to 41 a year ago. It also highlights that 2014 was the most lucrative year for venture capital since 2000.

Our belief of it being a yield-parched world is further solidified by these three facts above. Keep in mind that markets are trading at moderately expensive levels, a Greek exit (we agree, it’s more fun to call it Grexit) remains a risk to unraveling the Eurozone, and global bond yields are at ridiculously low levels. Meanwhile, a possible capital flight later this year due to US rate increases is not really enticing investors to rush into emerging markets (for example, the EEM tracker has underperformed the S&P 500 by over 10% in the past year). Therefore, to earn some return, investors are scouring all sorts of alternative routes to put their cash to work. This includes private equity, venture capital, shareholder activism, and other uncommon methods that most retail investors can’t access easily. So, be careful with making risky single stock trades – the smart money may be hinting that there’s no value left there, and therefore has moved on to other alternatives as shown by the 3 points above.

4. US corporate bond sales hit an all time high in 2014, at more than $1.5 trillion, according to FactSet. Meanwhile, this January, Apple conducted a $6.5 billion bond sale to lock in low interest rates. And, we highlight that the utilities sector is the worst performer in the S&P 500 so far this year.

The utilities sector is commonly used as a proxy for bonds due to the stable dividends and company risk profiles. The 3 points above show that companies and investors are preparing for a US interest rate hike later this year. We’ll be watching the Fed’s meeting minutes next week for hints on whether this happens. Inflation is not yet at the Fed’s target levels, and with a chaotic global geopolitical scene, it may just hold back. But at the moment, the markets – and we – are factoring in a rate increase in our decisions.

What it means for you: Per our previous article, if you can’t influence a policy maker, all you can do is adapt. Invest most of your hard earned money passively with ETFs such as SPY and VXUS and ignore the daily news noise – you’ll be fine in the long term. Still, it’s important to know what can impact your money. In the meantime, if you want to invest actively, note that 43% of active large-cap fund managers outperformed the Russell 1000 index in January per CNBC – way higher than the meager 20-odd% in all of 2014. So, take solace in knowing that the volatile markets so far – and likely ahead in 2015 – may be providing more short-term opportunities for smart investors to capitalize on. Companies benefiting from capital expenditure, consumer discretionary spending, and the US market as a whole should provide decent, stable returns in the next 2-3 years. Meanwhile, in the short term, choose single stocks extremely carefully, base your decisions on their products, management team and vision, and remember that high-dividend stocks might suffer significantly when interest rates do go up. For more ideas, check out our columns below, and keep an eye on the risks as you move ahead with the markets.

Neel Kulkarni February 22, 2015 Macroeconomic Insights, Stock Insights Read more >

Looking Into The Trends For 2015.

Some months ago, humankind rejoiced when the FAA started allowing travelers to keep phones on in-flight. While most of us were busy thumbing through our Facebook newsfeeds while the attendants nagged us to turn them to airplane mode, some logical investors were looking at the debt outstanding and private equity options for a little known company called Xhibit, betting it would collapse.

Looking into the details, we see that Xhibit is the owner of Skymall – the ubiquitous magazine that we all used to glance through in-flight because there was nothing else to do in that Jurassic (pre-airplane-mode) era.

Last week, the company declared bankruptcy – the phones being kept on wiped out their magazine’s customer base and corresponding revenue. A pretty nice reward for those logical people; it’s amazing how some simple observations could provide smart trade ideas. Quoting Sherlock Holmes, ask yourself this – you see, but do you observe? Facebook, Chipotle, Apple and Amazon, among others, have the most loyal customers, according to a late 2014 survey by Brandkeys. Check out these companies’ profiles. If we had invested in Nike or Microsoft in the 1980s (say, since the Oct’ 87 crash) after seeing similar trends then, you’d be up over 1000% in your investments. Do the ones above resemble them? I suggest allocating a bit of money to such stocks and chilling out for the long term, Interstellar-style. We’ll revisit the subject below with Shake Shack. With the majority of your money, of course, invest passively (for example, with the SPY and VXUS ETFs) and benefit with the markets in the long term. Meanwhile, for some fun, here are a few tactical plays for 2015:

1 – Tech and Biotech: We suggest an allocation to both – they aren’t as affected by interest rate hikes, and several stock picks lead the way in consumer trends, such as the ones above and Google. A McKinsey Global Institute paper from January focuses on productivity to save the day in a worldwide slowing growth environment. That’s technology’s next step. And an interesting quote from a Forbes article some months ago – ‘of all the deals with an initial financing between 2000-2010 that have [been] exited, roughly 8% of life science deals vs 4% of tech deals delivered above 5x realized returns’. Venture capital will continue to feed the booming biotech industry, and fuel the next steps in curing conditions, diseases and delivering higher life expectancy – which is slowly going upwards worldwide.

2 – Oil has bottomed out: We feel that the low 40s for WTI was basically it for oil – it isn’t sustainable. Companies are falling head over heels to cut their capex forecasts, including Conoco Phillips and Continental. Supply will reduce in some months. Wait for another week or two for the earnings season to taper off, and start buying XLE slowly.

3 – The bullish dollar trend: This has some more ways to go this year, with international regions fueling currency wars (Singapore joined the herd last week). It’ll hurt US exports, but that only forms 14% of GDP, according to Quandl. Smaller companies that derive revenues domestically may benefit more, and are worth looking into.

4 – Spending (wage growth and consumer discretionary stocks): Will it increase in the US? That’s a compelling question for 2015, along with capex spending. An interesting statistic from a Washington University research paper highlighted by the WSJ: ‘In 2012, 30% of consumer spending came from the wealthiest 5% of US households, compared to 23% 20 years ago’. Meanwhile, studies show wealth has gotten even further concentrated since the recession for the top 1%. As a result, we see the high-end retailers such as Nordstrom and Tiffany’s outperforming JC Penney, Sears, Target, etc over the recent 5 years. If we see wages growing, the middle class will benefit, and so will the retailers they go to.

5 – Macro trends: Our wild, surprise projection since the beginning of January is the European Stoxx 600 could outperform the US S&P 500, due to quantitative easing, and simply being oversold (last week, the WSJ noted that European stocks are at a 40% discount to US stocks, compared to 10% historically). Make sure to bet, though, via a currency-hedged ETF, such as HEDJ. Our projecting in mid-January that Germany is a smart investment has paid off well so far. But we’re in it for some more months. For other international picks, check our Outlook for 2015 post.

6 – Cybersecurity: Stocks in this subsector are richly valued, so while we don’t recommend buying in wholesale right now, it’s worth looking into. With hackers dominating headlines and business news networks turning into TMZ-equivalents far more often than in the past (Sony’s executive email leaks, for example), companies will spend on this to save on the embarrassment.

These are some trends to keep an eye on – we’ll keep adding as the year goes on.

To end on an appetizing note, let’s look into the details at Shake Shack. The Flatiron/Madison Square Park area in NYC is among the most frequented tourist destinations in the city. It’s also Shake Shack’s primary location, and significant consumer research (meaning, standing in line) reveals a great blend of tourists and locals. Now remember – high-browed New Yorkers traditionally frown upon chains. However, Shake Shack already has over 20 thriving locations all over the place. This burger must have made the cut for them. Meanwhile, it’s strategically positioned in JFK’s Terminal 4 at B23 and B37; at least half of the international travelers there have to walk past them to get to their gates to board for every corner of the planet, every day. What better way to say goodbye to a most-likely memorable New York, USA visit than with an American staple burger from Shake Shack? Imagine how happy they’ll be when the taste reaches their hometown. It’s not nearly there yet. The stock just IPO’d last week, and has extremely high expectations. Still, seeing – and observing – the consumer loyalty and growth trend may provide yet another delicious return by investing in this company for the long term.

Neel Kulkarni February 1, 2015 Macroeconomic Insights, Stock Insights Read more >

Taking Stock Of The German Market.

There’s a ton of stuff to love about Germany; beer, cars, football, and some seriously smooth public transportation are just the beginning of the list. The stock market, however, isn’t on too many investors’ Top-10-Things-I-Love-About-Germany files at the moment. The MSCI Germany index had a return of -10% last year, while the S&P 500 delivered over 13.7%; over a longer span of 5 years, Germany has returned 6.5% annually compared to the 15.5% return for the US MSCI index. With this significant underperformance, in my opinion, it may be time to place some money to work here, given the following reasons:

– Currency Depreciation: The Euro is projected to continue downward with quantitative easing, and Wall Street’s bullish dollar-projecting camp is growing by the day. Goldman Sachs even predicts a 1:1 Euro-Dollar parity by 2017. Companies focusing on exports benefit when the local currency depreciates, as the same goods sold internationally provide more local accounting revenues. Over half of Germany’s GDP is from exports, and while imports become more expensive, I believe the continued depreciation will bode well for Germany’s largest companies (Bayer, Allianz, Siemens, etc – all of whom have massive international revenue streams).

– US Capital Expenditure: In JP Morgan Private Bank’s 2015 Outlook, Michael Cembalest outlines a very telling graph – where the US durable goods and fixed investment as % of GDP is well below the 28% peak (last seen in 2007), suggesting the economy is far from saturated investment levels and only mid-way through the expansion phase. The US stock market has been heavily propped up by financial engineering via dividends and buybacks over the past two years, and capital expenditure remains the next stepping stone for the reviving economy (when this occurs, of course, is up for discussion – but with wages not budging, low inflation, and cheap debt available, companies have a lot of cash on hand to deploy into capital investment – so it’ll happen – stay patient). The US is the 2^nd largest export market (by country) for Germany, and considering the leadership role the US economy plays worldwide, a continued expansion will help international markets heal, along with propping German industrial exports.

– An Already-Battered Market: With European stocks getting hammered over the recent past, several hidden multinational gems within Germany have been dragged down with the herd and are trading at bargain prices compared to their peers. The benchmark MSCI Germany index itself is at a discount, trading at 12.7x forward P/E compared to the MSCI Europe index’s 13.9x forward P/E (as of Dec 31^st).

– Germany’s Engineering Prowess: There’s a reason why a country with only 80 million people has not had to deal with the outsourcing of engineering to countries such as India and China, where the technical expertise arguably exists, along with far cheaper labor. The differentiation factor for Germany is quality – something that cannot be easily outsourced and will remain a major strength, according to local sources and industry sentiment.

– East Germany’s Integration: In 2012, Morgan Stanley’s Ruchir Sharma had laid out an extremely positive scenario for eastern European growth – and in my opinion, eastern Germany should be placed in the same bracket. Note this – per CNBC, the GDP per capita in the East – even today – remains only two-thirds of the West after 25 years since the Berlin Wall fell, and unemployment is over 10% compared to the West’s 6% rate. At the same time, this is massive improvement from the past, and with population integration and government-aided investment occurring, the trend will continue, helped by proximity with the surrounding eastern countries that themselves are continuing their immersion into democratic, market-driven domestic growth engines.

– Negative Government Real Bond Yields – Germans are literally paying banks to hold their money. Sooner or later, the local population (traditionally known to be weary of stocks) will move towards the stock market in search of actual yield, benefiting the investors already there.

What it means for you: A smart way to invest and monitor is through HEWG – a currency-hedged Germany ETF that allows you to benefit from Germany’s growth while not worrying about the currency depreciation. Allocating some money to international markets is a smart approach at a time when everyone is talking about investing in the US because it’s the only developed economy showing resilience. And yes, oil-based capital expenditure cuts, a possible Eurozone-recession and deflation is looming; with the ECB set to make some unprecedented policy decisions on buying bonds in a few days, we’re looking at some pretty unchartered territory in European financial markets. However, a small investment here looks enticingly positioned compared to the risk, as Germany provides an interestingly unique diversification benefit compared to its developed Eurozone peers for the reasons above, as long as you keep an eye on the trade.

Neel Kulkarni January 14, 2015 Macroeconomic Insights, Stock Insights Read more >

Why Investing In India Makes Sense.

Whether bulls can swim or not is a confusing question (try googling it). However, one thing’s for sure – they definitely crossed some serious ocean miles last year to help the Indian BSE Sensex go up nearly 35% – and plenty are along the way right now too. The Indian stock market story remains one of serious structural, fiscal, and monetary reform anticipation, with the country well placed to perform in the coming years. A Wall Street favorite for investing in 2015, it is a consensus trade (and therefore a bit dangerous, since when everyone loves something, you want to be careful), but current foreign stock investment in India continue to be tiny compared to global counterparts – meaning, in my opinion, there’s room for everyone to have slice of the growth story in the long term. Consider this – today, the top 4 ETFs focused on India together have less than $10 billion dollars under management, compared to over $180 billion in the top S&P 500 ETF alone. Here’s why allocating some of your money into Indian ETFs makes sense:

1. The country has a ton of room to grow:

– Today, half of India’s population is under 25, and by 2020, the average age will be 29 – among the youngest in the world for a G20 economy. Young people spend, and this group is pretty seriously aspirational. By 2025, the middle and upper class will grow to over 55% and spend 3x compared to today, according to the Boston Consulting Group. Therefore, its domestic consumption growth will, within itself, provide a pretty sustainable self-reliant economy.

– Currently, the GDP per capita stands around $4,000, far lower than the world average of over $10,000 and even its peer emerging markets. Its number, in fact, is low enough to be compared to the frontier markets, such as Africa and South-east Asian nations. So, we’re starting on a very low point.

– It’s ranked 142nd out of 191 countries by the World Bank for doing business, and 54th in the global Logistical Performance Index. There’s a ton of room to improve, and fiscal agendas show the awareness of this.

– India accounts for only 7% of MSCI emerging markets index (Example tracker – EEM). While India accounts for around 5% of the world’s total market capitalization, it has a share of the world’s population of around 15%, making an interesting argument for sustained inflows in the years to come as India’s markets become more liquid.

– India’s services sector contributes over 50% of its GDP. The government’s ‘Make In India’ campaign is focusing on it becoming a manufacturing hub – a sector that has underperformed significantly, contributing to about 15% of GDP and 12% of employment, compared to over 25% in emerging market peers. Barron’s data recently stated that India’s carbon emissions per capita are around 1.9 tons per year, compared with China’s 7.2 tons and the world average of 5 tons – combining this with the inevitable needs for a transition into an industrialized nation, democratic nature, and solid relationships with developed countries, including the US, Israel and Japan, it has enough bargaining chips to not ruffle too many feathers on the climate change front.

2. It’s got the leadership to implement the changes:

– PM Narendra Modi and RBI Governor Raghuram Rajan have solid credentials. Modi’s focus on manufacturing, proven track record of implement policies successfully in his home state, and a reform-driven agenda is showing promise that the government is focused on the right issues, according to analysts. In a recent note, Morgan Stanley stated that ‘the pace of reforms is accelerating’, moving forward on land acquisition rules, labor flexibility, and a national taxation system – all previously identified as key foundations for solving the issues noted above.

– Meanwhile, Governor Rajan has delivered on his commitment to tackle inflation (down from over 9% to about 5% during his tenure) and protecting the rupee value in the face of currency wars in international regions. He has also got some fortunate backing with oil prices plummeting by nearly 50% over the past year. The country accounts for less than 1% of the world’s oil reserves but over 4% of consumption – further helping keeping inflation in check. India’s current account deficit has improved to only 2% of GDP – and as a result, put simply, ‘is less dependent on foreign capital’, according to Thornburg’s Lewis Kaufman, interviewed by Barron’s this week. While US interest rates are projected to go up this year, the country is slated to suffer much less from a capital flight than its emerging market peers such as South Africa and Turkey. On the other hand, it also provides a hedge in case the US Fed ends up, in fact, delaying the rate increase. An established Dalal Street advisor told me earlier this year that that his firm expects an 18% annual return over the long term from the Indian markets; so does Morgan Stanley and other institutional smart money.

What this means for you: With the Indian growth story looking pretty real, it’s worth joining the bullish herd on this one because, frankly, it’s still small right now. Plan to park some of your money into funds such as EPI, INDY, or INDA for a long term time horizon and gain from the international exposure and growth story of the world’s largest democracy.

Neel Kulkarni January 11, 2015 Macroeconomic Insights Read more >

Transporting The Future.

The 85^th anniversary issue of Bloomberg Businessweek in December featured 85 disruptive ideas that changed history – it had a pretty gripping countdown, with the #1 spot taken by a solid owner – the Jet Engine. In my opinion, it is definitely a smart winner – since its invention over 60 years ago, the world has truly changed in terms of global access, business, and international integration. However, its worth asking, has much changed within air travel since then? Marginally, sure, with greater cost-saving on fuel, airline alliances leading to increased connectivity, passenger comfort (maybe not even that!), and more industry competition. However, its not as if the time between New York and Mumbai has reduced from 16 hours by more than some minutes over the decades – the Concorde came close to the next major step ahead but sadly didn’t last. Now, check out SpaceX, Virgin Galactica, and other private space travel companies’ visions. In the times of Elon Musk, Mark Zuckerberg, Richard Branson, Google, and yourself, seeing the progress of technology over the past 10 years, isn’t it worth betting that the next 10 years will produce this major breakthrough? Possible vertical take off/landing locations inside cities, easier access to space leading to faster speeds between destinations on earth, maybe fully renewable fuel-usage leading to lighter planes and quicker flights, and increased private sector competition producing innovation could redefine the travel scene.

So, looking ahead with a 10 year time horizon, assuming the next breakthroughs occur in our generation, here’s what might look different:

Immigration patterns – ease of access to different countries and shorter flying times would lead to more immigration, greater culture-meshing, and physical movement of people (currently, international migrants remain steady at 3% of the world’s population).

Consumption – consequently, the access to luxury brands, foreign goods, and the ability to convert ‘wants’ into ‘needs’ would increase (McKinsey states annual consumption will go from $12 trillion to $30 trillion by 2025).

Competitive advantages – countries would have a greater ability to utilize their competitive advantages through increasing international trade agreements (we don’t expect the world to go backward, after all)– with population growth in (current) frontier markets and emerging markets far exceeding the developed world.

Education – through technology, more people would have access to education (over 5 billion online in 5+ years compared to 2.5 billion today, according to Entrepreneur), and consequently, eyes into the global world – and therefore travel and work where their personal skill sets are rewarded the best.

Healthcare – biotechnology, medical research and transportation’s progress would be able to move vaccines, medication, research and doctors across the world quicker and more effectively, consequently increasing life expectancy – projected to increase to 73 years by 2025 compared to 65 years in 1995, according to WHO. This, in turn, circles back to each other point above.

What it means for you: So, consumer discretionary funds, transportation, biotechnology, infrastructure, technology, among others, would provide nice returns if you want to park some money for several years and not look at it. Or, you could take the easy way and just buy a global equity fund like VHGEX, ACWI, or VT. In the long term, being exposed to the world is a nice idea.

Neel Kulkarni January 4, 2015 Macroeconomic Insights, Stock Insights Read more >