Keith Fitz-Gerald: Going Global

An interview with Ian Wyatt, Chief Investment Strategist, NewsletterAdvisors.com

 Explain your investment process and criteria for investments.

Our goal is to follow the best the world has to offer. Global investments are expected to double to $300 trillion dollars in the next 5-10 years and 60% of that growth is going to come from markets outside the U.S. and Japan.

The U.S. economy is hurting and will hurt for a long time that simply reinforces that it’s time to "go global" now more than ever.

I’m a self-described "techno-fundamentalist" in that I blend a combination of top down geopolitical analysis drawn from 20 years of professional experience with a highly quantitative approach developed over the past 15 years. Anything that I latch onto will have a couple of things in common: it will follow a virtually unstoppable global trend that adds to the momentum of a trend or sector we find appealing while passing several specific and proprietary technical analysis screens.

My target audience is typically an individual who is nearly retired or already retired and understands that the next best things don’t always beat the sure things. Ideally, this investor will understand that markets ebb and flow, and that we’re not going to win all the time. We try to bring a blend of honesty and integrity to the business. If investors are looking for the magic bullet or making 500% overnight, I’m not their guy, although we do have more than our fair share of super returns including many in the double and triple digit range.

Yes. China is the greatest single wealth creator opportunity in the world today. People who bow out today will miss one of the truly great investment times in their lifetime. Most of the people who currently pooh-pooh China have never been there. It only takes one trip to see we’re dealing with an unprecedented phenomenon. I lead our annual subscriber trip to China, and it’s a voyage of discovery in many ways. We do the touristy things, of course, but we also have a series of visits with chief executives, and government and academic officials to give us an insider’s look.

If something were to lead to a slowdown there or derail the economy, it would be China running out of water…most of its current supply is not potable. But the Chinese government knows this and they’re spending trillions of dollars to fix it. How bad is the water? As hard as this is to comprehend, even 5 Star hotels serve bottled water! As a result, there are some great opportunities to invest in companies engaged in the cleaning up of water. Pall Corp. (NYSE:PLL) and Danaher Corp. (NYSE:DHR) are two. Another big opportunity in China second only to water are food and agriculture, and the need to feed 1.3 billion people. Fertilizer maker Monsanto Company (NYSE:MON) has been on my buy list for some time now with over 300% in profits and is on Beijing’s short-list.

It’s not so much an edge but certain quantitative truths. I use non-linear analysis that allows me to see specific patterns developing—sometimes years in advance—that wouldn’t be identified using common techniques. And, I have a network of friends in low places that give me access to information and data that’s otherwise off limits to other traders. These people have come to know and trust me over 20 years .

On the short-term, I think we clearly have some problems. In my opinion, the world hasn’t completely digested the credit crisis, nor has the world come to terms with ramifications from high energy, and I think that presents some unique threats to our economy. It presents fantastic opportunities as well.

From six months to one year, investors need to be very careful and tread very light: the rate of failure is larger than the rate of success—unlike in the 1990s when risk of downside was much lower than the rate of success. Remember, people who piled in at the beginning of the bull market did very well. The dramatic run-up and subsequent failure in 2000 has led to all of the current strife. The bubble went into technology, then real estate, into credit markets and finally commodities. Now, the market is looking to absorb it again. If Ben Bernanke did indeed pull a rabbit out of his hat to save some financial institutions from destitution, we may be on track for a mid-2009 take-off in that sector. Another area I see for opportunity today are countries in the embryonic stages of development like the Middle East, Africa, Sudan and Egypt. Though risky right now, you have to start thinking about places like these before they hit the front page. Long before Russia and India took off, hedge fund managers and institutions were already profiting.

China and Eastern Europe. India’s basically been eclipsed by China. But some of the best opportunities in the world are in the U.S. The weaker dollar made us the Wal-Mart of the world. Outsiders can buy goods for pennies on the dollar, and exporters are growing by leaps and bounds because it makes their products very competitive.

If you’re serious about the market, you’ve got to invest in well-balanced positions that can withstand the ups and downs of the market. Think safety first, something that will capture the majority of ups and manage the downs.

Vanguard Wellington (VWELX) is one of my favorite funds because it has been around since 1929, with a track record that few other funds can match. The fund invests roughly 60%-70% of assets in dividend-paying value stocks. The remaining 30%-40% of the portfolio is invested in investment-grade corporate, government, and mortgage-backed bonds.

MGM Mirage (NYSE:MGM). Sin is in no matter where you live. What makes MGM unique is it has brand recognition and is based in the U.S. Partnered with the Middle East and China, MGM is developing huge premiere resorts in Dubai and other exclusive areas.

Gazprom SP’s (Frankfurt:GAZ.F) role in the Russian economy is hard to underestimate. It’s a sprawling company that raked in $91 billion last year. The company is a major supplier of natural gas to Europe, and it is becoming an important source of gas to fast-growing Asian markets like China and South Korea.