(By Keith Fitz-Gerald) As I write this, everyone from Wall Street to Main Street is using the word recovery in every other sentence. But what does a recovery actually look like and why should you care?
And, perhaps more importantly, how can you make back what you've lost in the meltdown? How long will it take? How can you speed up the process? Which sectors and business segments will lead the way? It's tough to admit, but the U.S. economy may take years to recover – if it ever does.
Just look at Japan as an example. Its economy has still not yet recovered from the bubble it experienced nearly 20 years ago. If our government is taking many of the same actions theirs did, why would we think things are going to be different for us?
Remember, Japan is not some backwoods marketplace in the boonies – it's the second-largest economy in the world, which means you can't dismiss what happened there in light of what's happening here and now. Especially when you consider Japan was an export-based economy to begin with. The United States presently derives less than 15% of its gross domestic product (GDP) from exports and fully 70% from consumer spending.
That places tremendous pressure on a group of people who are not only tapped out, but are licking their collective wounds after a 24-month financial meltdown.
Simply put, things will never be the same again.
SUVs no longer grow on trees, home-equity lines do not constitute a personal piggy bank, and derivatives are now destined for the financial trash heap.
Looking ahead, you can bet anybody who wants to buy a house will face tougher lending requirements. Credit-card debt will come home to roost and many companies that once existed on the margin will be forced to come to terms with their tricky accounting.
No siree, Bob. We believe that things will be radically different from now on. The rules of money truly have changed.
While this sounds scary, there's a flip side – new rules mean new opportunities. You just need to know where to look to find them.
The $300 Trillion Global Recovery
There is no question that the financial crisis has reshaped the world in ways the average investor is only just beginning to understand. But inasmuch as that's hard to stomach, don't forget that every crisis has produced legendary wealth for those savvy enough to capitalize on the changes it brings.
Using history as our guide, we think the current financial crisis could produce some of the largest gains ever recorded and generate as much as $300 trillion in new investment in the next few years alone.
Unfortunately, we believe that most investors, led by traditional economists, misinformed pundits, and gonzo journalists, will miss it.
Instead of looking at what's actually happening, they'll have their heads in the sand. Not only will they fail to see the new reality that's unfolding right in front of their very eyes, but they'll never set foot in the places where much of this growth is happening.
In other words, they'll apply the same old tired theories to markets that demand different results.
