Big Slow Changes

That is a panamax vessel headed on out to deliver stuff to some place that needs it.

If you have ever entertained owning one of the shipping stocks, well that's what it looks like.

It is not so easy to turn one of those around which is analogy for the US economy made by Abby Joseph Cohen a few years back (if I'm wrong in attributing it to AJC please let me know).

The slow turning tanker description can also apply to other things as well in the context of certain themes taking a very long time to play out.

Two points, then, that might tie in to the same theme that have been unfolding for a while.

Stephen Roach said that no country has ever devalued it's way to prosperity. The dollar has dropped a ton over the last few years. At the moment the dollar is either on the mend or this is just a counter trend move that will peter out and the dollar will head back down (I think the latter but that any future moves down would be slower than they have been).

While the dollar has been devaluing something else has happened, a lot of emerging markets have gone from being debtor nations to being creditor nations as the US has gone further in debt, a point made recently by Mohamed El-Erian and recapped here.

Both of these have been playing out for several years, could continue to play out for several more (that is the dollar continues to weaken and certain emerging markets get stronger) and all the while US equities, as measured by the S&P 500, are about 10% below where they were about eight years ago.

The stock market performance has been pitiful yet we have endured.

People get very worried about all of the negatives out there (and don't get me wrong they are out there and they are bad) for fear that we will have some sort of repeat of the 1970's. Based on stock market returns, it sort of is the 1970s, isn't it? If it is the 1970's all over again ok, on January 1, 1980 the S&P 500 stood at 107.94. On January 1 1990 it was at 353.40.

If the market ends up being a three and half bagger plus dividends in the ten years following whatever this is now we would all be thrilled. Actually I suspect that most folks would be thrilled with a 150% gain in ten years.

Obviously there is no way to know what will happen between 2010 and 2020 and so it makes sense to follow the money thematically. Forgetting about bad six month or twelve month periods that will come along and instead thinking big picture, where is the money going? What countries will prosper? What countries will ascend? What countries become more globally relevant?

If you are close enough to investing to read a stock market blog you already have opinions about which countries fit in to the above paragraph. Hopefully you are accessing these countries one way or another, that way you don't have to rely on a 250% rally in the next decade.