The Index S&P crossed the 1700 points in the beginning of August for the first time ever. The Dow Jones which comprises the oldest Blue chips of America (Apple is not yet in the DOW) crossed 15,600 points for the first time ever on the first of August. Who else is at the all time high? The Dax Index from Germany.
Since these are the main indexes that are at the all time highs (Mexico is also doing ok but not at all time high) one could ask who are the main beneficiaries from Globalization/Regulation/Complication that we are experiencing in the last 20 years.
I guess we could say the main beneficiaries are the biggest companies. The Bigger get bigger is the strongest trend of the last 20 years.
The Small is beautifull is a myth. Small is dying is the reality.
To benefit from Globalization a company must be huge, because to do business all over the world companies need to pay regulators, local autorities, to pay huge fines (JPMorgan, Barclays, BPetroleum, etc….), to have an army of lawers, auditors and complience officers, to be able to be sued and clients believe that they will survive. To be big is a great position to be.
On top of all this to have a Global brand and to be able to advertise worldwilde is a huge advantage. The Internet is also a trend that is benefing the american companies, like facebook, Gooogle, Amazon, Booking.com, etc….
If this is true how can we benefit from this trend?
1.We don't need to buy emerging market funds to benefit from what is happening in EM. The Global players can capture part of what is happening there.
2.Buy the Leader's of each market segment.
3.Buy Global sell local
4.Buy big & sell middle & small players
5.Buy brands & sell commodities.
We live in a world with excess supply in almost everything and the only players that have a bit of pricing power are the leaders, the brands and the nº1 in each industry. The Globalization is benefiting the L'Oreal, the BMW, the IBM, The Boeing Company, etc….
Globalization is a death sentence for the local player.
Amazon.com Inc. sells more online than its next 12
biggest competitors combined, including Staples Inc. and Wal-Mart, according to the trade
publication Internet Retailer.
Nothing new here, to be the biggest in one segment or market is the best position to be. Small is not beautiful, small is dying.
"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized."
Fourth Amendment of the US Constitution
In Mayor Bloomberg's New York City you can be strolling down the street minding your own business and be stopped for no reason whatsoever by police officers and made to assume the position as they grope about your body crevasses looking for contraband. (From The Room with David Galland).
I guess we need the constitution to protect the people from the government. But unfortunately the Governments everywhere in the world don't care about the constitution. Private liberties are severely curtailed.
Just finished my summer holidays. This year i spent all my time in the mountains (Estrela and Minho/Gerês) with my kids. In the Mountains everything is cheap, there is no fog in the morning and almost no wind! It's different from the beach. All the nights are warm and we can look at the stars because there is almost no light. The rivers where we swim were so clean and cold that we could drink the water where we were swimming. Beautiful places but very difficult to make money there. Unfortunately it's impossible to make a living there. One must work in a big city to make money and eventually take some time off to spend there. (i guess the winters should be difficult ....).
My 2 Boys, (Manuel and Vasco) in the highest mountain in Portugal, a bull in Gerês and me and my bike.
Not everybody believes in this and are in business with nothing to offer! Some companies have an average product, with average marketing and average service. When there is excess demand even these people can survive. On Valentine's day every restaurant even the lousy ones are fully booked! Why? because on Valentine's day there is clearly excess demand for seats.
However in all the world there is excess supply of almost everything. So you have to have something to be able to survive. You have to have a difference, you have to know something, to claim some benefit difficult to copy, etc....
Nothing is Nothing.
