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Have you ever heard
of Dominique Strauss-Kahn?
He's a French national, 59 years old, who holds a law
degree as well as a doctorate in economics from the
University of Paris. He taught college for a while,
including at Stanford. He also served in the French National
Assembly, is a former cabinet official and even ran for
president.
Any of that ring a bell?
Probably not. And yet this erstwhile economics prof --
whose name you don't know and whose face you wouldn't
recognize -- is now one of the most influential
men in the world.
He's not a head of state. He's not a corporate CEO. He's the managing director of the 185-nation International Monetary Fund
(IMF),
which oversees the global economy. The fund's staff monitors
worldwide financial activity, provides technical assistance
and lends money to promote economic stability and stave off
crises.
And if you listen to Strauss-Kahn and his staff, you'll
hear some very good portfolio advice.
Here's what he recently said:
"The consequences for some financial institutions are
still in front of us. We have to expect that there may be in
the coming weeks and coming months other financial
institutions with some problems," he told reporters last
week.
Now that's hardly revolutionary. In fact, it sounds a
lot like Strauss-Kahn was saying the IMF will have to wait
and see which banks fail like everyone else. But the IMF, in
reporting its chairman's comments, edited in this critical
aside:
"IMF projections indicate a decline in global growth
[from initial estimates of +4.8%] to
about +4.0% in 2008, reflecting the slowdown in the United
States, Europe."
That's a truly remarkable statement, and it should change
the way you invest.
But it's subtle, almost in code. Let's add a little
context.
The United States, Europe and Japan, as you know, are
the three largest economic powers on earth. We need look no
further than the IMF's own data to see that they produce
64.5% of the world's goods and services. Given their
dominant position, what happens in those three countries has
long been the economic reality for the rest of the world.
That is no longer true.
It used to be said that when the United States sneezed,
the rest of the world caught a cold. Well, now the United
States doesn't just have the sniffles, it looks as though
it's been stricken with the plague. The United States isn't
going to see anywhere near the +4.0% growth the IMF is
projecting, not this year and not for the foreseeable
future. The most exact estimates available predict the U.S.
economy will expand by only +0.517% in 2008 and just +0.561% in
2009. Japan and Europe will see growth rates of about
+1.0%.
And yet Strauss-Kohn and the staff at the IMF, who have
access to the best macroeconomic data in the world, say that
global growth is nevertheless going to clock in at +4.0% --
even despite the slowdown in Europe, the subprime mess in
America, and malaise in Japan.
Where is all that growth going to come from? The
smaller countries we overlook. The continents we forget
about. The regions where we can't name a capital or head of
state. The three economic powerhouses might be ailing, but
it turns out the rest of the world is as healthy as a horse,
and their expansion is going to keep the world afloat and
stave off a global recession.
Go Where the Money Is
China will grow at
+9.8% this year and +9.0% next year. Taiwan is projected to grow at a
+4.3% rate, more than eight
times the U.S., and Singapore and Hong Kong will post at
least average growth.
And remember: These are export
economies. If they're selling, that means the rest of the
world is buying.
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Country |
Projected 2008
Growth |
|
Angola |
+21.4% |
| China |
+9.8% |
|
Argentina |
+6.0% |
|
Brazil |
+4.8% |
| Taiwan |
+4.3% |
| United States |
+0.5% |
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The growth
picture is similar in South America -- Peru,
Argentina and Uruguay will average about +5.0% growth this
year, while Brazil, the fifth-largest country geographically
and tenth-largest economically -- will see enviable +4.8%
growth this year and +3.7% next.
Eastern Europe and the former Russian republics are
open for business and rolling like juggernauts. Many
African nations are predicted to exceed the global growth
rate -- Angola by a factor of four -- and the Middle East
will at least match South America.
Strauss-Kahn is careful with his words and speaks with
the tact of a diplomat. But what he said couldn't
have been more plain: The U.S. is part of the problem right
now.
Our nation is a net drag on international financial
health. Strong economies -- the so-called "emerging market"
-- will be making up for the superpowers' lost ground.
Redeploy Your Assets
Economies are cyclical, and things eventually will improve here at
home. We think it will be a matter of years, not
months. Now, caution is always prudent, but there's no need to wallow in
misery. If you want to focus on Wall Street's unfortunate
highlight reel, all you need to do is turn on the news. But
you're not going to recoup any of your losses doing that,
let alone make any money.
You can make money, however, by sending your dollars to
work for you in strong international markets. By doing so,
you not only insulate your assets from the U.S. financial
crisis, you also put them to work in a healthy economy where
the ink is still black, not red.
Now, U.S. investors tend to overlook the impact of
dividends. U.S. companies, primarily because of the nation's
previous longstanding double taxation policy, tend to pay
light dividends. The S&P 500 pays an average 2.5% dividend
-- not very exciting.
But foreign countries offer substantially higher
payouts. New Zealand companies pay an average 8.6%
dividend. Taiwan is paying 5.8%. And these are averages
taken from their benchmark indices. The strongest dividend
payers in those markets -- and elsewhere around the world --
pay even higher. We've been recommending a Taiwanese
manufacturer that's currently paying 11.8%
And these companies are stable, steady enterprises --
the most respected and highly trusted businesses in their
countries. They've paid out these high dividends for years
and years, as reliably as Johnson & Johnson or Bank of
America -- but with much, much higher yields.
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The impact of that yield cannot
be understated. If you invested $50,000 in a U.S. stock paying a
2.5% dividend and reinvested the gains, you'd have $64,000
in 10 years.
But if you invested in a country like New
Zealand, where the average dividend is 8.6%, you'd
have $114,000 in 10 years, a difference of +78.1%. |
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Your Personal
Guide to International Investing
Now, you'll need a guide on
your quest to find the world's richest dividend streams. StreetAuthority is the leading income-oriented financial
publisher in the U.S. Nick Lanyi -- editor of
StreetAuthority's premium High-Yield International -- and
the rest of his team put decades of
experience to work as they use the best information
resources available to uncover the investments that will
earn your portfolios the returns you deserve.
Nick went Down Under to the Australian market, which
is paying an average 5.0% yield. Australia is predicted to
deliver roughly six times U.S. growth this year and next. Nick's
favorite Australian
pick is currently yielding 12.6%.
Not only is this a high-yielding pick in a strong
economy, but Australia is also a great place to capture
enormous capital gains. In fact, the market there has
generated +86.2% in capital gains during the past five years.
Compare all that to any stock in the United States, and
the choice grows crystal clear. The average U.S.
company is delivering lower yields -- likely about a third of what Nick's Australian pick is
paying. Plus the overall Australian economy is far healthier
than the United States'. And, finally, the Australian market
has historically beat the pants off its American counterpart:
The five-year return for the S&P 500 is only
+25.9%, which Australia beat by 60.3 percentage points.
Some U.S. investors are anxious and think it's prudent
to wait. But a U.S. turnaround is going to take years. No investor can afford to sit
still -- especially now, knowing you can immediately invest
in healthy markets with rich dividends and robust price
gains.
And believe it or not, we can make this decision even
easier for you...
That's because the Australian security Nick is
recommending is an ETF that you can buy right now on the
American Stock Exchange using your
current brokerage account. You can participate in the
exciting Australian market without opening a new account, worrying about
currency exchanges or filing tax credits to claim
international dividends. It's never been easier -- or more
profitable -- to invest abroad.
If you stick with domestic equities, you'll miss the
opportunity to earn substantial income and capture strong
capital gains. You may think your portfolio is merely
treading water. It's not. Its basket of U.S. stocks is
drowning.
High-Yield International
can be your lifeline.
When you subscribe
to this premium publication, you will receive priceless
guidance on the fastest-growing and highest-yielding markets
in the world. But that's not all. You'll also receive access
to all of Nick's best international favorite
international stocks and funds, including the
Australian ETF yielding 12.6%.
Go here to learn more about
High-Yield International.
Global Dividend Opportunities
GlobalDividends.com
839-K Quince Orchard Blvd.
Gaithersburg, MD 20878-1614
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