Trends: The global cell-phone revolution, the commodities supercycle, Europe's Reagan revolution, the explosion in financial services, and Africa (the final investment frontier).
According to Nicholas Vardy at MSN Money, global megatrends are "fundamental and long-lasting shifts in the world economy that can make you big profits over the course of a few years." His global megatrends are listed below.
Link: Nicholas Vardy Strategy
Also called "top down" investing, megatrend investing is more strategic than tactical. The philosophy behind the strategy is simple: One straightforward (but correct) decision about the "big picture" trumps many small decisions and hand-wringing about the outlook for everything from global interest rates to a company's earnings next quarter.
1. The global cell-phone revolution
No technology has spread further and faster than the cell phone. It took television 30 years to penetrate 70% of households, but the cell phone achieved this level in less than a decade. While penetration rates have topped 80% in the United States and even reached 100% in markets such as Scandinavia and Israel, they have barely hit 40% in Latin America, 15% in India and 10% in many countries in Africa. The growth is breathtaking. India adds 6.9 million subscribers -- almost the population of Manhattan -- every month.
2. The commodities supercycle
Investment guru Jim Rogers thinks that we are in the middle of a secular bull market in commodities that began in 1999 and will last until about 2015. In the past decade, China has become the No. 1 consumer of copper, steel and iron ore in the world, consuming more of both than the United States and Japan combined. On the supply side, no major oil field has been discovered in the world for the past 35 years. Virtually no new mine shafts have been opened in the last 20 years. Yet for all the headlines copper and platinum are grabbing today, soft or agricultural commodities are the place to be during the next five years.
3. Europe's Reagan revolution
Thirty years after the launch of Margaret Thatcher's free-market revolution, the economic policies of European governments are increasingly echoing the ideas of the Reagan revolution. The recent election of Nicolas Sarkozy as French president is yet another nail in the coffin of the European welfare state. Even socialist Sweden is starting to abandon its much-vaunted Nordic model. In 2007, Europe will grow faster than the United States for the first time in recent memory. Powerful multinationals, macroeconomic reforms and a strong euro will ensure that investors in Europe will enjoy strong returns for years to come.
4. The explosion in financial services
Hundreds of millions of citizens of developing countries aspire to the lifestyles and consumption habits of Americans and Western Europeans. These new lifestyles need new types of financing. Fifteen years ago, banks in developing countries offered little more than savings accounts. Today, they have transformed into modern financial institutions offering a diverse range of services. The share prices of the banks and financial institutions can appreciate fivefold or tenfold over the course of a decade.
5. Africa: The final investment frontier
Africa today evokes images of grinding poverty, natural disasters and appalling infrastructure. This conventional view, however, is surprisingly inaccurate. For the third year in a row, sub-Saharan African countries grew on average by 6% and are nudging toward 7% this year. Take India and China out of the equation, and sub-Saharan Africa is growing faster than Asia.
