During the last decade we saw a huge demand for infrastructure development in the emerging markets.
This was especially true for those countries making up the BRICS: Brazil, Russia, India, China and South Africa.
The Commodities Boom
Had you invested in commodities, or those companies producing building materials like copper, you would have fared better than the S&P 500 Index during the same period of time.
And what about precious metals?
With rapid growth in the emerging markets came a rapid increase in inflation, which typically entered into double digit territory. In order for the governments of these growing economies to put a curb on inflation, their respective central banks acquired large positions in gold as a hedge against inflation.
It is no wonder that we saw precious metals show a dramatic price increase during the past decade.
So what does this current decade hold in store for us as far as investment possibilities?
The Emerging Market Consumer
This second decade will see the rise of the emerging market consumer.
A rising international middle class will want the same goods and services that we in North America take for granted.
If this is so, then we can tap into these wants and needs by allocating a portion of our investment capital in those industries that will be providing those much desired products and services.
The new middle class is aspiring to have an improved diet, better health care, access to major appliances and the use of new phone and computer technologies.
A question to ask yourself is: What businesses should do well if there is an increase in the global demand of a particular company’s products or services?
Over the past couple of years we have seen a phenomenal demand for products associated with the mobile internet.
Take Apple for example. The company has seen a huge growth in its iPhone and iPad products, propelling the company to be both the market leader in its sector as well as best of breed in its industry.
What are some of the other industries that should see incredible growth during this decade?
Industries to Watch
With an emerging global middle class we can expect to see above average growth in the following:
- baby foods and formulas
- pre-packaged meals
- fast food and specialty restaurants
- health care products – supplements and drugs
- mobile internet – phones and pads
- household appliances – kitchen and laundry
- brand-name clothing manufacturers
These are just a handful of the industries that should see better than average performance internationally over the next decade. Now you can start drilling down, finding great stocks that are market leaders poised to take advantage of an expanding global middle class.
Should you prefer investing only in American companies, look for those businesses that have at least 30% of their net profits coming from outside of the U.S.
Also, invest in those companies that you know and understand. You are better served by picking out a handful of those best-of-breed businesses with strong fundamentals rather than a country specific ETF or mutual fund.
In a nutshell, over the next decade you may be well-served by investing in those international companies that allow people the opportunity to increase their standard of living.
There are many factors influence the price movement for the stocks. Broadly we can categorize those movements into technical or fundamental reasons. Short term investors can more focus on the technical data and long term investors can more focus on the fundamentals of the company. This article explains how the beta value shows risk factor for particular stock.
What is Beta value of the stock?
Most popular risk indicator for a stock is beta. Beta measures the volatility of price in the market. For example, it gives you the fair idea on how the stock will react for market movements. If the beta is 1, the stock has no volatility and moves with market. If it is greater than 1, it has more volatility and over react for the market movements. For example, if the market saw a down of 2%, this stock will fell down more than 2% because of its higher beta. (Note that price fluctuations are determined by many other factors. High beta stock may react opposite if the particular stock has any breaking news on that day). A beta less than 1 means it tends to be less volatile than the market.
Why you should know Beta?
It is important to know the risk before investing into a specific stock. For small investors, judging the risk is essential before investing any huge amount. I would advice you to check the beta, if you are interested in investing on the less volatile stock. Any mistake on the stock selection would erode all your money.
Beta value of some stocks in January 2011
|IBREALEST||Indiabulls Real Estate Ltd.||2.28|
|PUNJLLOYD||Punj Lloyd Ltd.||2.22|
|IOB||Indian Overseas Bank||2|
|JSWSTEEL||JSW Steel Ltd.||1.89|
|LICHSGFIN||LIC Housing Finance Ltd.||1.87|
|YESBANK||Yes Bank Ltd.||1.86|
|IDBI||IDBI Bank Ltd.||1.8|
|HDIL||Housing Development and Infrastructure Ltd.||1.73|
|GMRINFRA||GMR Infrastructure Ltd.||1.7|
|UNIONBANK||Union Bank of India||1.62|
|RECLTD||Rural Electrification Corporation Ltd.||1.53|
|BANKINDIA||Bank of India||1.44|
|GLENMARK||Glenmark Pharmaceuticals Ltd.||1.38|
|BHARATFORG||Bharat Forge Ltd.||1.33|
|FEDERALBNK||Federal Bank Ltd.||1.31|
|ASHOKLEY||Ashok Leyland Ltd.||1.27|
|MRPL||Mangalore Refinery & Petrochemicals Ltd.||1.26|
|MUNDRAPORT||Mundra Port and Special Economic Zone Ltd.||1.17|
|TECHM||Tech Mahindra Ltd.||1.16|
|PFC||Power Finance Corporation Ltd.||1.09|
|TATACHEM||Tata Chemicals Ltd.||1.01|
|INDHOTEL||Indian Hotels Co. Ltd.||1|
|SRTRANSFIN||Shriram Transport Finance Co. Ltd.||1|
|ABIRLANUVO||Aditya Birla Nuvo Ltd.||0.97|
|UNIPHOS||United Phosphorus Ltd.||0.79|
|EXIDEIND||Exide Industries Ltd.||0.75|
|BANKBARODA||Bank of Baroda||0.74|
|ADANIENT||Adani Enterprises Ltd.||0.71|
|MCDOWELL-N||United Spirits Ltd.||0.71|
|HINDPETRO||Hindustan Petroleum Corporation Ltd.||0.58|
|ASIANPAINT||Asian Paints Ltd.||0.56|
|OFSS||Oracle Financial Services Software Ltd.||0.54|
|CUMMINSIND||Cummins India Ltd.||0.53|
|PATNI||Patni Computer Systems Ltd.||0.52|
|COLPAL||Colgate Palmolive (India) Ltd.||0.49|
|GRASIM||Grasim Industries Ltd.||0.48|
|GLAXO||Glaxosmithkline Pharmaceuticals Ltd.||0.42|
|TORNTPOWER||Torrent Power Ltd.||0.4|
|BEL||Bharat Electronics Ltd.||0.26|
|CROMPGREAV||Crompton Greaves Ltd.||0.26|
|ULTRACEMCO||UltraTech Cement Ltd.||0.2|
|CONCOR||Container Corporation of India Ltd.||0.15|