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Where Is Global Growth?

Photo courtesy of likeablerodent

For the past 2 years, we have had to settle with America’s anemic growth being the attraction of the world. Yes China was still growing 7+% (or so they say), but no one was buying that as Chinese stocks hit 2009 lows. And Africa was powering higher but other than high net worth investors with access to hedge funds, few could take advantage of high flying illiquid stocks on small African exchanges.

So where does that leave an investor or trader, looking for a long term trend that he can ride? That would lead to two sectors. And what sectors have been on my mind for our clients? (There are 5-6 major trends I am studying and will develop) The sectors that have intrigued me the most, but also the ones that have frustrated me the most are:

  • water
  • pollution

Both of these trends are here to stay – in fact we could wrap both of these up into one word – China. But to simplify these industries based on the expected continued demand for clean water and pollution control in China would be simplistic. We have water problems in the Southwest USA. There are pollution problems all over the world, in water supplies, in factory exhaust, etc.

The key is to find companies that can provide what the world needs in a cost effective manner. It also means finding the companies that can distribute their products worldwide. This means it would be good if they could develop relationships with nations like China, Saudi Arabia, Dubai, Myanmar, India. So we can’t have a company with their political hands tied. Therefore, this may not include American companies where we like to make foreign policy out of punishing the helpless citizens of countries with leaders we don’t like (as if they could vote them out!). Sorry for the political rant but it is something we must consider.

With all of this in mind, I am currently reviewing 13 pollution-related companies and about the same number of water companies. Hopefully the list will grow to give me more ideas to review. I will keep our clients updated in our quarterly letters about what we come up with. In the meantime, be careful out there!

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