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Forget China and India:Europe Will Overtake the US |
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While the United States is looking over its shoulder at China and India, it is Europe that is going to surpass the United States as the world's leading growth engine within the next 20 years, according to Victor Canto, founder and chairman of founder and chairman of La Jolla Economics, a leading economics consulting firm.
Spurred by competition from Eastern Europe, Ireland and Spain, the rest of Europe is beginning to make major economic strides: While the Morgan Stanley index tracking North American equities is up 7.6 percent year-to-date, the index that tracks equities in the European Union has risen 11.6 percent so far in 2007. (Victor, it would be better to use the S&P 500 since it is US specific—do you know how much it is up this year?) Canto expects Europe to pick up more steam with the recent leadership shifts in Germany, France and soon in Britain. He sees Europe at the same stage as the United States was nearly 30 years ago when Ronald Reagan was elected president. Reagan slashed marginal tax rates from 70 percent to 35 percent, unleashing an unprecedented economic boom. Smart investors can easily capitalize on the coming economic power swings. In his new book Cocktail Economics, Canto explains how to apply economic changes that might be discussed over cocktails to investing. His investment approach of cyclical asset-allocation versus traditional asset allocation calls for investors to periodically deviate from the long-run optimal allocations to take advantage of predictable fluctuations in the market. Using his step-by-step guide, investors learn how to pinpoint which group of stocks or which asset class will break away from the pack during an economic shock such as tax or monetary policy change, natural disaster, or shift to the underlying inflation rate. |
