One Great Stock
We’re all aware of the trend to self-centeredness that has fueled the rise of the selfie. Thanks to technology, everyone can now be important-or at least appear to be.
This trend toward increased celebration of the individual actually parallels a trend that’s been going on among countries for more than a century.
It’s the trend toward the formation of smaller, more individualized countries, and you can see it clearly in the numbers.
World War I brought the collapse of the Ottoman, Habsburg and Russian empires and sparked the creation of a plethora of new states in Central and Southeastern Europe: Albania, Austria, Cyprus, Danzig, Czechoslovakia, Estonia, Finland, Hungary, Iran, Iraq, Ireland, Latvia, Lebanon, Lithuania, Poland, Syria, Turkey and Yugoslavia.
World War II decimated European empires in Asia, Africa and the Middle East, spawning dozens of new countries between 1945 and 1965. (I started a list but gave up; it got very complicated.)
Decades later, the collapse of the Soviet Union led to the creation of what are now 15 independent countries: Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan
And the breakup of Yugoslavia brought seven more: Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Serbia and Montenegro, and Slovenia.
The last decades of the 20th century saw these nations “sneak” onto the list independently: Namibia, Yemen, the Marshall Islands, Micronesia, the Czech Republic, Slovakia, Eritrea and Palau.
But in the current century, only three new countries (East Timor, Montenegro and South Sudan) have managed to break away from larger states.
Maybe the trend is slowing down.
Nevertheless, as a result of the upheavals of the last century, the number of sovereign nations now stands at 206 (or more, depending on how you count), up from only 95 in the 1950s.
And the trend is certainly not over.
Sub-Saharan Africa is ripe for realignment and division, as old colonial boundaries fail to reflect ethnic, economic and cultural realities.
The Middle East has a huge range of possibilities for fracture and realignment, and a look at the progress made by the countries above might lead one to conclude that it’s better to encourage breakaway republics than to fight to keep unhappy unions together. (Maybe we need a process like no-fault divorce for countries.)
In Ukraine, in fact, Kiev has eased its control of portions of the eastern provinces of Donetsk and Luhansk. Whether they fall back into Russian control or become independent entities, time will tell.
And while Scotland failed to break free from the United Kingdom, in Spain, both Catalonia and the Basque area appear to be capable of splitting off and thriving.
In Belgium, the Flemish and Walloon populations could split up relatively peacefully.
Greenland, which expects to grow richer as climate change uncovers natural resources, could break free of Denmark.
And closer to home, French-speaking Quebec could finally become independent from Canada.
I won’t get into what’s possible here in the U.S., but one thing is certain.
Change happens, and it will keep on happening, despite the efforts of traditionalists to halt it.
This long trend toward smaller, more individualized countries began in a world without electronic communication, and now it’s continuing, abetted by technology that enables individualism to an increasingly grainier level.
Where it will end, I have no idea, but in general, I recommend embracing the change. Scary as the unknown future may be, on balance, it tends to be better than the past.
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· AK Steel Holdings (AKS) up 19% in two weeks
· Amkor Technology (AMKR) up 111% in six months
· Cadence Pharmaceuticals (CADX) up 54% in eight weeks
· ChinaCache International (CCIH) up 176% in ten weeks
· Extreme Networks (EXTR) up 15% in four weeks
· Gastar Exploration (GST) up 23% in two weeks
· Glu Mobile (GLUU) up 30% in seven weeks
· MiMedx Group (MDXG) up 10% in two weeks
· Quantum Fuel Systems (QTWW) up 54% in ten weeks
· Scorpio Tankers (STNG) up 3% in one week
I fully expect that investments in this year’s report will be just as rewarding.
Ironically, while the number of countries continues to grow, the number of languages spoken continues to shrink!
Which on one hand is a shame, because it means a loss of culture.
But on the other hand is great, because it means we can communicate better with each other, and communication is the first step to understanding.
According to Wikipedia, “The general consensus is that there are between 6,000 and 7,000 languages currently spoken, and that between 50% and 90% of those will have become extinct by the year 2100. The top 20 languages, spoken by more than 50 million speakers each, are spoken by 50% of the world’s population.”
Additionally, about 5% of the world’s languages (somewhat over 300) are understandable to 95% of the globe, leaving the remaining 95% of languages spoken by about 5% of the world’s population.
More importantly, when it comes to communication with others, today, nearly a third of the world’s population can communicate with only three languages, English, Spanish and Mandarin.
So, knowing that trends tend to continue, does it makes sense that one of these three languages might eventually prevail? (Furthermore, being a native English speaker, can I possibly address this question without personal prejudice?)
Well, China is and will continue to be a powerful growth force in the current century, as the profits in Cabot China & Emerging Markets Report (LINK) attest. But Mandarin is not a “world language;” it has a minimal amount of non-native speakers.
So odds are it won’t be Mandarin.
As to English and Spanish, history tells us there have been several lingua franca in the western world. Latin dominated for about 2,000 years, then French in early modern times, and now English is ascendant, thanks in no small part to U.S. “leadership” in popular electronic culture.
But whether the ascendance of English continues, or a stronger trend arises to disrupt that trend, is impossible to know. (Turkey, for example, is on tap for rapid growth and is well positioned, geographically.)
In any event, I do like the fact that people are increasingly less “foreign” to each other thanks to language and that long-term trends promise increased progress in this area.
One Great Investment
Moving onto the market, the “buying stampede” that was kicked off in mid-October has slowed, but the trend clearly remains up.
And now we’re in December, the last month of the year, and a very good one, traditionally, for investors.
In fact, December has been the best-performing month of the year for the market, on average, since 1950, with an S&P 500 gain of 1.7%.
One reason for that is that investors dump their losing stocks by mid-month and buy new, more aggressive picks by year-end.
You could play this pattern by simply owning an index fund through the year-end and into January.
But a better way is to own individual stocks-specifically low-priced stocks-in the second half of the year, so you benefit dramatically (on average) from the buying power that comes in mid-month and continues into January.
So what stocks should you buy?
For quite a few years here at Cabot, we’ve been publishing a report designed to steer you toward the top prospects, and people who’ve come to depend on this report have done extremely well.
Buyers of last year’s recommendations, for example, saw these results.
- AK Steel Holding (AKS) up 19% in two weeks
- Amkor Technology (AMKR) up 111% in six months
- Cadence Pharmaceuticals (CADX) up 54% in eight weeks
- ChinaCache International (CCIH) up 176% in 10 weeks
- Extreme Networks (EXTR) up 15% in four weeks
- Gastar Exploration (GST) up 23% in two weeks
- Glu Mobile (GLUU) up 30% in seven weeks
- MiMedx Group (MDXG) up 10% in two weeks
- Quantum Fuel Systems (QTWW) up 54% in 10 weeks
- Scorpio Tankers (STNG) up 3% in one week
I think that’s pretty good, and if you think so too, it’s time to reserve your copy of Cabot’s 10 Favorite Low-Priced Stocks for 2015.
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Yours in pursuit of wisdom and wealth,
Chief Analyst, Cabot Stock of the Month
Publisher, Cabot Wealth Advisory