A New Decade A Changed World:

As we start a new decade investors should take some time to reflect on the previous ten years and how those years of economic turmoil are likely to impact on this new decade. It seems to me there will be two long term economic trends that carry over in to this new decade and will have a profound impact going forward.


The first and likely the most powerful trend is the continuing economic growth in Asia. China and India are starting off the decade in a position of economic strength that will give these countries a huge advantage over the next ten years. The development of a strong and diverse middle class will generate enormous internal economic activity that will power the expansion through any short term softness in western growth. By the end of the decade China and India will be global economic powerhouses set to rival the US economically. The entire Asian region will be big winners going forward as the middle class expands and demands more and more modern and diverse consumer goods.

The second trend (concern) is the unprecedented expansion of debt by the Western Industrialized nations. In an effort to relieve the financial stress of the credit meltdown Governments have issued debt at an unprecedented rate, the rush to stop the economic meltdown regardless of cost will have extremely negative long term effects on the economy. I believe that Governments have set in motion the potential for rapid and debilitating inflation that will cause extensive and devastating economic damage across the entire economic spectrum.

As a long term strategy I would stay away from debt issues by all Western Nations, consumer, communications, transportation and financial stocks. I would be long gold, energy, industrial commodities, agricultural suppliers and Asian industrials.