The big question, of course, is China. And there I think investors can see the first steps toward a strong-enough policy reversal that it will put a bottom in on economic growth around the middle of 2012. Here's part of a timetable put together by Caixin Online:
● Oct. 25: The China Banking Regulation Commission published new policies for granting preferential loans to small companies and limits on service charges to small companies. China's smaller companies have been hit hard by the government's attempt to rein in bank lending.
● Oct. 29: Premier Wen Jiabao spoke of the need to fine-tune China's macroeconomic policies.
● Fourth quarter of 2011: The government looks to be planning to move from a slight budget surplus in the first nine months of 2011 to a slight deficit in the fourth quarter. The total deficit for the year would be only about $130 billion, but the switch from surplus to deficit would signal a move to stimulate the economy.
All this, in my opinion, puts China on track for a growth bottom near an 8% annual growth rate (down from the current 9.1%) in the middle of 2012 and then a gradual acceleration in growth.
That's roughly the picture that the Organisation for Economic Co-operation and Development sees as well: Growth in the world's 20 largest economies will slow to 3.8% in 2012 from 3.9% in 2011, before accelerating to 4.6% in 2013. (I've got my doubts about that 2013 part, but let's leave that for another day.)
So what investors are really looking at is a kind of growth desert in the first half of 2012, with growth slowing in both the developed and developing economies before picking up in the developing economies in the second half of 2012.
Stocks for this desert
Now on to the hard stuff -- where do you put your money? Four answers:
Dividend stocks: While we're waiting for the growth train to come in, getting paid a yield of 3.5% or more while we wait seems attractive. That was part of the logic behind my recent recommendation of DuPont (DD, news) (You can read it here.)
Developing-economy bank stocks: Bank stocks will be one of the first sectors to pick up as central banks in these countries cut interest rates, because that will increase the net interest spread for the banks and lower the risk of loan defaults. One to consider is Brazil's Itaú Unibanco (ITUB, news). I'd stay away from China's banks because of big, unrecognized, bad loan problems.
Developing-economy stocks that focus on the domestic economy: If developed-world export markets grow slowly or not at all, a majority of acceleration in developing-economy growth will come from domestic sales. I'd rather own a Baidu (BIDU, news) or a Ping An Insurance (PNGAY, news) in China or a Gol Linhas Aéreas Inteligentes (GOL, news) in Brazil than an exporter such as Brazil's Vale (VALE, news).
Developed-market stocks with a big exposure to developing economies: China is the big growth market for Coach (COH, news), and the emerging markets are the big targets for a food company such as Nestlé (NSRGY, news).
Any investing road map is subject to revisions. The main reason for this one is even-slower-than-expected growth in the world's developed economies over the next nine months. If the euro debt crisis has proved nothing else it is that investors should never underestimate the ability of politicians to muck things up.
At the time of publication, Jim Jubak did not own or control shares of any company mentioned in this column in his personal portfolio. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not now own positions in any stock mentioned in this post. The fund did own shares of Baidu, DuPont, Gol Linhas, Itaú Unibanco, Nestlé and Ping An as of the end of June. For a full list of the stocks in the fund as of the end of June see the fund's portfolio here.
Jim Jubak's column has run on MSN Money since 1997. He is the author of the book "The Jubak Picks," based on his market-beating Jubak's Picks portfolio; the writer of the Jubak's Picks blog; and the senior markets editor at MoneyShow.com. Get a free 60-day trial subscription to JAM, his premium investment letter, by using this code: MSN60 when you register at the Jubak Asset Management website.
Click here to find Jubak's most recent articles, blog posts and stock picks.
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The Fed has been printing more and more money for a long time making what the people have buy less. The Fed is and intends to keep interest rates near zero for a long time in the future.
So everyone with any type of saving account is getting zero or near that in return on their account. Many of these people will simply run out of money as they use up their principal instead of earnings. Those in possession of these accounts are making more money, but they are not spending it to hire new people. As far as the government is concerned these people, with savings, can simply run out of money, loose their homes and die broke. They, the ones in power, government and big Corps, do not care!
Jubaks fund is one of the worst performers in his catergory, has less than 29 million in assets undermanagement. Why does this guy have any credibility?
His management fee is also ridiculous. Not only can he not advise his expertise is higher than those managers who are proven
Long is good, but so is hand sitting. 2012 is an election year and in an election year the markets can be all over the place, skitterish and unpredictable.
Sure I agree with you, But you got to admit BGS is looking good. My point is why isn't the dude covering the good ones.
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