I am shifting our portfolio assets into sectors that will thrive against a backdrop of slowing GDP g...
Global Perspectives on Investing
04/18/2008 12:00 am EST
John Rutledge, PhD, chairman, Rutledge Capital, gave attendees an upbeat market and economic outlook, albeit from a unique approach.
In his closing keynote, Rutledge led attendees through a unique look at the global markets and economies-dissecting their current and future prospects from a scientific point-of-view.
Using energy and motion as comparisons, Rutledge told his audience that the key to understanding global economics was as simple as finding out where energy tools-such as human capital or natural resources-are in short or large supply, and then understanding that prices are determined by that scarcity or abundance.
For example, he demonstrated this notion by commenting that labor in Asia was abundant, so prices were low; oil in Kuwait is plentiful, so folks don't pay for gas there.
But with the technological knowledge available today, countries are linking together to share their energy and tools, Rutledge said, driving prices, wages, and investment returns to a greater equilibrium state and creating a truly global marketplace.
He acknowledged the current slowdown, but noted that he doesn't believe it is a recession, but a blackout of the capital markets. That being said, Rutledge predicted that it won't last forever and sees signs of recovery, which will lead to a shockingly-good economy.
The market is beginning to understand that there is a bottom, and Rutledge told attendees that when the lights come on, you don't want to be out of the market. He followed that warning up by cautioning that this is not the time to sell.
Specifically, Rutledge said courageous investors will make the most money this year in financial stocks. For those who are less risk-averse, he recommends large cap multinationals, such as Cisco Systems (Nasdaq: CSCO), a company with more than 50% of its value offshore. He also cautioned against investing in China right now. Instead, he suggested that investors looking for investments in that region buy shares in Australia, New Zealand, Korea, and Singapore.
As for the upcoming election, Rutledge expects higher taxes, no matter who wins, and a good stock market.
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