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10 Global Trends Worth Watching

Posted July 18, 2008

Krista Das on TFN Market Insights Playing the international markets is still one of the safest bets right now. Choose the right trends and this investment strategy becomes even stronger. Bill Patalon, one the nation’s top analytical business journalist tells us where to invest, even in this economy.

by Krista Das

Baltimore — (TFN): Playing the international markets is still one of the safest bets right now. Choose the right trends and this investment strategy becomes even stronger. But how do you know which trends are winners and which are duds? Bill Patalon, one of the nation’s top analytical business journalists and the executive editor of Money Map Report says surprisingly that’s nowhere near as difficult as most investors think. Bill, welcome to Market Insights.

So tell us, how do we get ahead of the investment curve and tap into a global trend before everyone else does?

Bill Patalon: I think you follow the money. That’s kind of the cliché, but it’s the best strategy that’s out there. You look at where the financial trends are headed, look at where the money’s flowing and look at the trends that are alive with that and make sure that you play them and you’ll win every time.

10 Global Trends Worth Watching Krista Das: Now in one of your articles you list Ten Global Trends that are Worth Watching. The first is the sovereign wealth funds. Explain.

Bill Patalon: That’s one of the newest trends we’ve seen here. These are government controlled investment pools. As the dollar has gotten weaker and with energy prices very high and commodity prices high, a lot of these foreign countries that are commodity rich have been able to build up big cash pools.

Now they’re reaping the benefits of that. They’re taking that money and investing it around the globe, especially in the United States where a lot of asset values are at their low points right now.

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Krista Das: Second on your list is energy.

Bill Patalon: Energy investments are a legacy play. These are investments that are going to be part of your portfolio for the rest of your life. Oil is going to run low. We’re seeing in China, in Beijing alone they’re adding 1,500 vehicles a day. In India the leading auto maker is coming out with a $2,500 car that’s aimed at the masses.

Fuel consumption’s going up and energy prices are going to stay high. That’s a wave you have to ride.

Krista Das: Then third you say to buy into buyouts.

Bill Patalon: Right. Again with commodity prices being high, look at companies that are commodity rich that have big cash pools. They’re going to look to increase their market share. They’re going to do that with buyouts.

They’re going to look at markets where asset prices are low, where they can scoop up bargains and they’ll make their move there.

Krista Das: Now the fourth trend you said is bio-tech.

Bill Patalon: Right. The U.N. talked recently about this silent tsunami of hunger that’s sweeping the globe. The output of food is not meeting the requirements. Same thing as with energy.

So bio-tech companies are coming up with new products. Bio-engineered seeds, bio-engineered fertilizers. They’re increasing the crop yields in farmland and they’re allowing countries to become self-sufficient. This is a great play that you’re going to be able to make money on. Again, it’s a legacy play. You’re going to be able to make money on this for years to come.

Krista Das: Then fifth is housing. This is certainly one that most people are running away from. Why do you suggest this?

Bill Patalon: I think it’s something you have to keep tabs on. It’s not time yet to jump in here, but because in the United States housing obviously is a big driver of consumer spending and consumer spending accounts for about 70 percent of the economic activity here in the United States.

So, housing, when turns around consumer spending is going to turn around as well. So that’s just a sector you have to keep tabs on.

Krista Das: Now sixth you say to invest in income. What do you mean by this?

Bill Patalon: Specifically here I’m talking about dividends. A big part of stock returns has been dividends. You can go back 100 years and the statistics bear this out. You want to look for stocks that have a nice dividend yield to enhance your return. It also provides kind of protection on the down side if the markets turn against us even more than they already have.

Krista Das: Then in number seven you suggest to invest in three of the four of the BRICs, Brazil, India and China, but what about Russia? Why not?

Bill Patalon: Russia is – it’s like the Wild West. Right now they’ve become much more hostile against the United States and against capitalist countries again. The rhetoric has picked up.

We’ve seen them go in and grab back properties in some of the energy areas. We’ve seen that with BP, with Royal Dutch Shell. It’s just too much of a risk right now. It’s a real disincentive to foreign investment. I think right now it’s a market you want to avoid.

Krista Das: Then eighth on your list is gold, which a lot of people would invest in anyway in a recession it seems.

Bill Patalon: A lot of people look at gold as a hedge. We look at it as a wealth play. As markets like China and India, as we see the middle classes emerge there and as we see wealth accumulate, people there are going to start to migrate towards luxury goods and that includes gold.

Krista Das: And then number nine, going along with gold is commodities.

Bill Patalon: Correct. That’s kind of the twin tier of inflation. You see energy prices that are riding high and so are commodity prices. This is one of the first leg of the commodities boom. This is going to continue for years to come.

There are several ETF’s you can play to capitalize on this. Deutsche Bank has one. The symbol is DBA. Market Vectors has one. Believe it or not the symbol is MOO, M-O-O. Those are both areas you need to be in.

Krista Das: And then last but not least, you say don’t give up on the greenback. How can you profit from the sinking value of the U.S. dollar right now?

Bill Patalon: You want to look at maybe an inverse fund, like the Rydex URSA fund. It’s a fund that moves opposite the market. So if the dollar continues to weaken and that hurts stock prices, the value of that ETF would actually increase.

Krista Das: Well, Bill, it was a pleasure. Thanks for telling us about some of the investment trends we should look out for.

If you would like to learn how to profit from these trends, check out Bill’s investment research service, Money Map Report. Just click on the screen or visit Today’s Financial News.com.

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Posted by Krista Das · Filed Under Featured Video, Investment Strategies, Podcast, Videos 

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