Email of the day (1)
Comment of the Day

November 19 2010

Commentary by David Fuller

Email of the day (1)

More on the Standard Chartered Super-Cycle report first discussed on Monday:
"I refer to the recent Standard Chartered report, which you posted on the site. Below is my two cents worth regarding long-term forecasts:

"As you know, long-term forecasts tell us more about the state of mind of the author, since nobody can see two or even three years out; let alone 20 years into the future. In my humble opinion, there are too many unknowns in the world today (money printing, food scarcity, looming energy crunch etc), to accurately predict what the world will look like in 2030. Nonetheless, I do concede that human beings are smart and the world's economy will probably be a lot bigger 10 or even 20 years now. But, nobody can say exactly how big.

"In terms of investing, I think it is more useful to pay attention to the monetary policy and chart patterns, because these will tell us when to become aggressive and defensive. For now, the monetary conditions are favourable, yield curve is steep, so I suspect that we are nowhere near the next major bear-market. When conditions change, regardless of long-term positive forecasts, I will change my strategy and focus of defending capital. In this business, we trade the markets, not the world's economy!"

David Fuller's view Very well said and I could not agree more.

In Monday's comments on the report I emphasised two crucial factors: the first being economic governance which individual countries could influence, the other being exogenous events largely outside the control of any government, such as climate change, a crippling energy shortage or a catastrophic terrorist/military conflict.

Some long-term forecasts do indeed tell us more about the state of mind of the author, and I would include claims that we were in an economic depression, which I described earlier this year as "irrational pessimism". Time will tell.

Depressions are a rare event in developed economies and seldom occur when much of the global economy is booming, as we see today. There are other long-term cycles or secular trends which we have seen in the past, and for which we can identify symptoms of reoccurrence. Fullermoney themes over the last eight to ten years fall into this category. This month's report from Standard Chartered supports our hypothesis and takes it further.

Meanwhile the market's verdict remains crucial for all investors. For this reason we provide a state-of-the-art Chart Library. At Fullermoney we intend to manage our medium-term investment strategy in line with monetary policy, market sentiment, price trends and standards of economic governance.

What are Fullermoney's secular investment themes? These are well known to veteran subscribers but here is a list for those of you who have joined the service more recently:

Fullermoney Secular Themes

Asian-led emerging (progressing) markets
Central and South American-led resources markets
Precious metals
Industrial resources
Supply inelasticity themes such as energy and water.
Global infrastructure development
Information technology
Western multinational leaders leveraged to the Asian-led global economy
Dividend 'aristocrats'

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