Initial results indicate that US corporate earnings haven’t fallen off: 30 percent of the S&P 500 companies have reported and the majority has beaten estimates (though excessive pessimism led analysts to lower estimates). The current market rally now seems to be supported by fundamentals.

Although many more companies have yet to report, the sample is large enough to justify some optimism that profit growth will remain strong into the end of the year, an assessment I’ve advanced for some time now.

My views on the global economy and financial markets remain benign--the markets can stay strong for the foreseeable future (see SRI, 11 October 2006, Testing…Testing).

Corporate reporting is underway in Asia, too, and the numbers have been positive to this point. India, in particular, is off to a flying start as more and more companies are earning consensus earnings per share upgrades.

Long-term readers will recall that India has been one of my favorite investment themes for many years. Because an increasing number of investors are showing interest in the India story, a review of the basics seems to be in order.

India remains by far the most exciting growth story among global emerging markets (GEMs) in general and Asia in particular. It’s home to the most diverse group of quality companies across a range of sectors.

Although India has never exhibited strong growth characteristics like the rest of Asia and can’t match China’s reported growth rates, it's avoided the boom-and-bust cycles so prevalent in the region’s developing economies. For an investor interested in achieving serious long-term returns, this fact is of paramount importance. And because India still represents only 2 percent of global GDP and 1 percent of world trade, it's been less important to investors, even after accounting for the strong interest shown by investors since 2004.

Many investors, although they’ve begun to appreciate the country’s potential, aren’t yet convinced that India can deliver on par with China for the long term. This is a positive development because seasoned investors with knowledge of India’s economy and politics are ahead of the game.

I've had some big winners in India for my subscribers, but my best call was on HDFC Bank. The booming lender has been an excellent core holding for any long-term investor, up over 203 percent during the last several years! I recently found another bank in Thailand that's poised to rocket higher. The best is yet to come as we get set to ride this winner all the way!

Follow The Money

At the Institute of International Finance's (IIF) recent annual meetings in Singapore, IIF Chairman Dr. Joseph Ackerman (also Chairman of the Group Executive Committee of the Deutsche Bank AG) met with members of the World Bank and highlighted this year's favorable growth performance for the Eurozone, Japan and large parts of emerging markets, particularly those in Asia.

From Moscow to Manila, emerging markets are soaring. Net private equity investments in these emerging markets are projected to reach a record $260 billion this year. Investor relations and data transparency overseas have improved dramatically during the last decade, helping individual investors evaluate profitable investment opportunities.

When you start thinking globally, your investment perspective changes dramatically. What's domestic, anymore? New York-based oilfield services firm Schlumberger Ltd. earns 78 percent of its revenue from outside the United States. McDonald's Corp, about as American as apple pie, also relies heavily on overseas revenue.

Think Globally

Are your investment returns becoming stagnant? Or worse yet, have you lost money on Wall Street during the last five years? Isn't it about time you refused to settle for measly investment returns with the "Dogs of the Dow" on Wall Street that barely cover the rising rate of inflation?

According to my research, we're witnessing the dawn of a great new bull market. Globalization is a powerful trend that's here to stay. In fact, last year alone this trend generated a 58 percent return in Korea, a 37 percent return in India, a 161 percent return in Egypt and an 83 percent return in Russia--all while the S&P gained a measly 3 percent. It’s a trend I expect to continue.

Whether you're a beginning investor, or you simply want a well-rounded, large-cap portfolio with the finest companies on earth, I'd urge you to pull the trigger and take advantage of this special opportunity. If history is any guide, this run will last for many years, handing investors the chance for life-changing profits. You could be one of them!

© 2006 Yiannis G. Mostrous
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