Guest Author - Tony Daltorio
The real winner of Tuesday's election was John McCain. He does not have to be President for the next four years. I do not envy President-Elect Barack Obama and the economic challenges he will face as the 44th President.
Look at the Wall Street cry-babies on Wednesday and Thursday. The market sold off nearly 1000 because they were "disappointed". They thought President-Elect Obama would have hit the ground running and already appointed a Treasury secretary to tackle the economic crisis. Talk about high expectations.
Today's economic numbers pointed to the poor shape that the US economy is in right now. The unemployment rate climbed to a 14-year high at 6.5%. There were 240,000 jobs lost in October, after a revised 282,000 jobs lost in September. These are definitely recessionary numbers.
Barack Obama is not officially President until January and yet the heads of various US industries are already lining up and looking for government handouts. As I have stated in prior articles, the American taxpayer had better be prepared for many more bailouts. It is going to cost taxpayers many trillions of dollars altogether!
Auto executives have already met with House Speaker Nancy Pelosi looking to line up billions in a government bailout. And it's not just the financial and auto industries. Also look for the airline industry and the insurance industry, among others, to request huge government bailouts.
In last week's article, I lambasted bankers. But I could level criticisms at nearly all the executives of American companies. Many companies are being run into the ground.
I believe this is being caused by a combination of greed and an excessive focus on short-term returns. When making investment decisions for their companies, most overseas executives look at a 5-10 year time frame.
However, many American executives look no further than the next quarter or so. This is because of the Wall Street game - did quarterly earnings beat "expectations". Focusing on the short-term is no way to run successful companies and that fact is coming home to roost at many American companies.
WHAT SHOULD AN INVESTOR DO?
Despite the problems, if an investor is a long-term investor now is a good time to begin to accumulate high-quality blue-chip stocks. There are still some great American companies including: McDonald's, Boeing, Microsoft, Berkshire Hathaway, etc.
I will re-emphasize a point I've made before here and to everyone I speak to about investing. The real money will be made where the economic growth is the greatest. That growth is greatest overseas. Overseas markets are down in sympathy with US right now, so now is a absolutely great time to buy shares in those markets.
Here are some FACTS you will never see on CNBC. Currently, more than 75% of all economic activity takes place OUTSIDE the US. More than THIRTY of the FIFTY most profitable companies in the world are located OUTSIDE the US.
Here is an interesting fact put forth by renowned economist Antoine van Agtmael, the man who first coined the term "emerging markets". He states the following - "EVERY 22 days, a new company OUTSIDE the US generates a BILLION dollars in sales for the first time. That is truly remarkable!
So make sure that your portfolio has a mix of US and overseas assets!
