As I finish the European leg of my Great Rebalancing journey, my thoughts on opportunities and ideas will largely flow through my Cabot Explorer service.
But there is limited time for reflection as I regroup and prepare for the Asia-Pacific leg which will take me through Southeast Asia and then on to Japan.
I know a lot more about Asia than Europe, but there is still much to learn about Asia and opportunities to put forward stock ideas to complement U.S. stocks, such as consumer companies of emerging markets. In addition, U.S. tech companies have enormous stakes in Asia, which creates growth opportunities and risks.
While based in Asia as a diplomat and banker, I was fortunate to get a ringside seat to watch how influence and money shape a country’s power structure, economy, and foreign policy.
I also developed friendships with a circle of rising business tycoons sometimes referred to as Taipans – a term which roughly translates as “bigshot.”
What I learned surprised me.
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These new Taipan tycoons do not have any background or skills that you don’t have. Many of you are better educated and grew up in much better circumstances compared to the humble beginnings of most new tycoons.
So, as I prepare to embark on my Asia investment tour early next year, let’s reflect on where their edge and strategy actually come from.
In short, they think differently. I can assure you right now that the new billionaire tycoons grasp that global power and profits are making a dramatic shift to the Pacific Rim.
Just as the 20th century was centered on the Atlantic, the 21st century belongs to the nations bordering the Pacific Ocean.
The new tycoons are also already acting on a key finding in the U.S. National Intelligence Council 2030 report:
“The growth of the global middle class constitutes a tectonic shift: for the first time, a majority of the world’s population will not be impoverished, and the middle classes will be the most important social and economic sector in the vast majority of countries around the world.”
While this economic pie of $6 trillion in spending power is enormous, the new tycoons know that a select group of favored blue chips will capture the biggest slice. And though we all like to believe in free markets, the new tycoons play by a different set of rules.
Now, quite frankly, following the new tycoons is not for everyone.
Yes, there is a bit more risk in investing in the leading consumer companies of Singapore, Chile, Panama, Indonesia, Korea, Mexico, or Taiwan than investing in Kraft but the potential rewards are far, far, greater.
Here are five reasons you need to add some emerging market consumer companies to your portfolio now.
5 Reasons to Invest in Emerging Market Consumer Companies
1) They offer you the same great balance sheets, 3-4% dividends, and talented management of traditional blue chips plus much higher growth and upside potential.
2) They enjoy a “favored” position in their home markets with the fastest-growing middle-class consumer markets in the world.
3) They are already considered blue chips in their own country and many trade on U.S. exchanges.
4) They are substantial companies. For example, the average market value of the top 30 emerging market consumer companies is $29.8 billion.
5) They operate in countries that avoid the high debt, high deficits and poor demographics that plague well-developed countries.
In short, just imagine the opportunity right now of investing in the Johnson & Johnson stock of a century ago. This is how the new tycoons are building their fortunes at lightning speed while most investors keep falling behind.
You too can profit greatly by investing in the JP Morgan of Singapore, the Heinz of Malaysia, the Kraft of Thailand, the Google of Russia, the Starbucks of Taiwan, the Chevron of Indonesia and the Jet Blue of Panama.
This is your opportunity – now go out and seize it.
To follow the Taipans and learn more about the companies poised to benefit from the growing global middle class, subscribe to Cabot Explorer today.
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