The richest countries in the world.

Posted by adesigar on August 12th, 2006

Heres a question. What will be the richest countries in the world in a few decades? If you answered any of the following USA, UK, Germany, Japan you got it wrong. Try again. Did you think it was China, India, Brazil, Russia? Wrong again.

Where does wealth come from?
Wealth comes from natural resources which can be harvested and sold to those who want them. Wealth also comes from material that can be changed into something more valuable through proper application of knowledge, skill, labor and equipment. So we have 2 ways to generate wealth. Harvesting natural resources and improving resources thru knowledge and labor. With world population bursting at the seams there is an ever increasing availability of people and labor. Natural resources on the other hand are finite.

What makes a country wealthy?
If a country consumes everything it produces it creates no wealth. If a country consumes more than it produces its poor. Only countries that have a surplus are wealthy. You may feel that China fits the bill since it has a trade surplus with most countries. China has an extremely large population that is currently living on basic necessities. As the population starts to become more consumer oriented more of their manufacturing and production will be used to satisfy internal needs. The countries that I feel are the richest are Australia and Canada.

Why these 2 countries?
Lets look at some Figures first

USA - Population 300 Million - Area 9.6 Million sq kms.
Canada - Population 32 Million - Area 9.9 Million sq kms.
Australia - Population 20 million - Area 7.7 Million sq kms.

These two countries have extremely large land masses with barely the population of 2 major american cities. Furthermore Canada and Australia are developed countries with good infrastructure and stable governments unlike the middle east and africa. Geographically Canada’s proximity to the US and Australia’s relative proximity to China gives both these countries major customers that need natural resources.

How to invest?
A simple way to get exposure to these countries is to use an ETF.
IShare MSCI Australia (EWA)
IShare MSCI Canada (EWC)

Commodities, International, Investing ideas, Predictions 9 Comments »

Water - The most important Natural resource.

Posted by adesigar on August 11th, 2006

“Water water everywhere but not a drop to drink”

Seventy Five percent of the world surface is covered in water but 97% is salt or otherwise undrinkable. Another two percent of water is held in Glaciers and Polar ice caps. One, just ONE percent of the water on this Blue planet is usable for drinking, household use, agriculture, construction, manufacturing etc. Shocked? It gets worse. Water consumption is increrasing at 2.5 times the population growth. By 2025 two-thirds of the world population will live in water stressed conditions.

What are people supposed to do? Stop drinking water? Stop bathing? Stop agriculture, construction and industry? NO the answer lies in more efficient use of water, better distribution, purification, filtering and increasing the water supply. The companies that deal with water in any form will show good steady growth over the next few decades.

My Personal opinion is that since this is a very long term bet and there are no stand out companies that i can think of the best way to play this would be to invest in PowerShares Water Resource Portfolio (PHO) . If you prefer to invest in individual companies over Mutual Funds or ETFs my favourites are Aqua America, SUEZ, and Veolia Environnement. I have included a list of companies that form the Palisades Water Index.

Conflicts: I do not own shares in any of the companies or funds listed.

Commodities, Investing ideas, Predictions No Comments »
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