The Growth Thesis
Everyone needs a thesis. Your thesis is a belief. It is important so that a strategy and a plan of action can be designed. When it comes to investing my thesis happens to be growth in developing countries.
The biggest casino in the world is not in Las Vegas, it’s in Macao. The fastest growing movie industry is not in Hollywood, but in Bollywood. The world’s tallest building is now in Dubai. There are 2.8 million millionaires in China, a figure which is rapidly closing in on North America’s 3.3 million. The biggest mall in America does not even make it into the top ten in the world. India is building what will be the world’s biggest refinery.
Why is this important? Because, while the more established economies have been contracting, the other 5/6 of the world is doing fine. GDP growth rate for India and China has hovered around 8 percent, while North America and Europe are closer to 2%. Investing in emerging markets is like buying into America in 1900. There will be lots of wild rides, a fair share of failures, but there is also virtually unlimited possibility. There are 5 billion new consumers out there in these parts of the world, and they are a hungry market.
The growth thesis suggests that these markets will counteract the dips elsewhere. There is potential for these new economies to experience ten years of growth that should surpass anything we have seen yet. It may take a different shape or be in an unexpected place, but the opportunity is there.
