How To Play Global Growth

Description:

Durable goods (ex: computers, TV's) are typically considered luxuries. Thus, durable goods experience faster growth than do nondurable goods given a rise in income (evidence: between the 3rd quarter of 1960 and the 4th quarter in 2001, spending on durable goods as a % of consumption increased from 6.9% to 15.6%. In comparison, spending on nondurable goods over the same time period fell from 40.5% of consumption to 29%). Being that globalization and capital mobility will likely lead to rising global wealth over time, this should then be bullish for durable goods.

To best take advantage of this very long-term, slowly evolving trend, it appears that you must maintain a position in durable goods. Also, make sure to purchase companies highly levered to global (ex-U.S.) growth.

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