Age of Man: The Only Global Trend that Matters
For the first time, the planet’s population has crossed the seven billion mark. The world’s population has increased more than tenfold in the past three centuries, and it is expected to reach 10 billion in this century. To put this in perspective, human biomass is already 100 times larger than that of any other animal that has ever lived on the planet.
This new human-dominated era has a name: literally the “Age of Man.” And the growth of humankind itself has become the world’s most important investing trend.
This kind of “mega trend” may not be winning a lot of attention in the mainstream media. But it is a critical insight for global investors. The “Age of Man” is literally changing the face of the earth. As such, it will have profound implications on every investment decision you make for the rest of your life.
Once you understand the implications of this, an important question arises: How do you invest in the “Age of Man”? The answer is remarkably simple: You invest in what people need and what people want.
One of the contours of the population bulge is that most of the growth is happening in the emerging world, in places where people are for the first time leaving poverty and entering consumer society.
What these people need is basic materials to build better homes, more animal protein for their diets and more energy to power their new lifestyles.
One company that is set to profit in a major way for demand for basic materials is Brazilian iron ore producer Vale S.A. (NYSE:VALE), the world’s largest producer of iron ore and the world’s second-largest mining company.
As new consumers in the emerging world drive up demand for steel to build homes with, demand for Vale’s iron ore will rise. (Vale is also the world’s second-largest producer of nickel and manganese, important alloys in making high-tensile steel.)
This is good news. Because at writing, Vale shares look cheap. Its price-to-earnings ratio—the ratio of the company’s share price compared to its per-share earnings—is just 5.7. But its historic earnings-per-share growth rate—the portion of the company’s profit allocated to each outstand share—is running at close to 20%.
That means Vale is a both a value and a growth stock… and a great addition to your “Age of Man” portfolio.
Of course, the world’s new consumers will have wants, too. After they have built better houses… and better factories and offices… they will do what consumers in the developed countries do. They will go shopping.
And just like consumers in the West, one of things they will desire most will be new gadgets. In particular, smart phones. Smart phone sales will hit the 450-million mark this year. And this market is growing like crazy—at a pace of roughly 50% a year.
To play this growth, you could buy shares in a smart phone maker such as Apple, BlackBerry or Nokia. But this is a highly competitive market. And today’s winners can easily become tomorrow’s losers.
So I prefer to make a much safer bet and buy the chipmakers that power the great leap forward in mobile technology.
Intel Corporation (NASDAQ:INTC) is a great place to start. For one, the company’s low-power Atom processors power a wide range of smart phones. This is a competitive market. But Intel’s $9 billion research-and-development budget for 2011 highlights the kinds of advantages Intel’s size and scale bring.
And even better, at current levels, Intel is also a value and a growth stock. At writing, it is on a price-to-earnings ratio of 10.7. And it has an historical earnings-per-share growth rate of 16.8%. This means the market is offering you Intel’s huge growth potential at an affordable price.
Both Vale and Intel are going for cheap right now. And they are two of the best ways to profit as the “Age of Man” continues. Snap these two bargains up before it’s too late.By Gary Scott
In 2012 seek safety ﬁrst. Chase growth second. Economic history suggests that investing bargains will unfold later in 2012 or 2013. Focus on keeping what you have to cash in on good deals later.
Invest in safe Scandinavian bonds. An analysis from the American National Bureau of Economic Research points that Denmark, Sweden, and Norway are among the safest countries in Europe to lend to. Each Scandinavian country (Denmark, Norway and Sweden) has its own currency—the kroner. The Danish, Swedish and Norwegian kroner provide a European weighting but protects against euro problems.
Invest in Scandinavian bonds through NASDAQ OMX. (Scandinavia generally refers to Denmark, Norway and Sweden. Nordic countries refers to a broader group comprising both the Scandinavian countries, including Finland, Iceland, and the Faroe Islands.)
The OMX Nordic Exchange offers investors access to the key ﬁnancial markets based in Northern Europe’s Scandinavian and Baltic nations. In 2007, this exchange was purchased by NASDAQ to make it easier for American investors.
Americans can invest in the Nordic Stock Exchange by opening a trading account with a ﬁnancial institution or brokerage ﬁrm with access to global markets. Your broker will then forward your request to a licensed member of the OMX Nordic Exchange.
Editor’s Note: This article was taken from a past issue of International Living’s monthly magazine. To get full access to all past and future articles and to receive the magazine in the mail or online each month, simply click on the below button to subscribe to International Living magazine at the special introductory price of $49. You will get instant access to the current issue of the magazine as well 10 years of back issues. As an added bonus, we will also send you a FREE report – How to Retire in Paradise on $30 a Day. (You can cancel your subscription at any time.)