Financial Brief, How to Profit From Strong Foreign Growth

While the U.S. economy has been experiencing anemic 2% to 3% growth the past few years, foreign economic have been doing great. As the following chart from the International Monetary Fund (IMF) shows, Eastern Europe economies are expected to grow 5.7% in 2007 . . . Developing Asian economies should grow at 9.6% . . . and China’s economy will likely go up an amazing 11.2%!

The IMF says, “global GDP growth should advance 5.2% in 2007. Emerging market countries have continued to expand robustly, led by rapid growth in China, India and Russia.” Henderson Global Investors comments, “Strong growth in emerging economies is boosting global growth to a 35-year high.”

The reality is that a global trading economy has emerged that is increasingly independent. While problems in the U.S. still have global repercussions, strong foreign economies can continue to perform well, even when the U.S. is performing poorly.

The bottom line for investors: If you think a U.S. recession is likely in the near future, concentrate your portfolio in areas largely immune from that recession — such as investments in India, China, and Brazil. Top sectors which we recommend include select agricultural, commodity, mining and technology stocks.

See our current portfolios and new stock picks for our recommendations.

Hot Commodities

Another alternative to U.S. stocks is commodities. During the last nine years, we have had a major bull market in commodities. Here are some examples of the huge price increases in commodities
(prices as of 7-30-07):

• Crude Oil $78, +759% since 12-21-98
• Uranium $120, +1,870% since 2001
• Copper $365, +605% since 10-30-98
• Platinum $1,300, +357% since 10-98
• Lean Hogs $73, +351% since 12-14-98
• Gold $675, +233% since 2001

Overall, commodities are continuing to rise rapidly. In 2006, the Commodity Research Bureau’s index of
commodity prices rose nearly 20%. That’s following a 32% gain in 2005. There are many factors pushing commodity prices upwards, including enormous, hidden U.S. inflation, soaring global demand from rapidly developing nations – notably, China and India, which together have 2.5 billion people — and the global war on terror, which consumes lots of resources.

Investor demand is also fueling commodity prices, as investors look for safe havens for their money in a troubled and uncertain world. How can you invest in commodities? There are many different ways,
including commodity stocks and options. I particularly like options, since a mere 3-5% movement in commodity prices can mean a 100%-200% movement in options prices.

To find out more about trading options, call 1-707-746-8796 and ask for Jim Elwood.