The decline of the Western World and the rise of emerging markets was one of the main topics discussed at this year’s Strategic Investment Conference.
The publisher of the long-running Gloom, Boom & Doom Report Marc Faber considers that emerging markets will vastly outperform developed markets.
In 1970, the total market cap of US stocks as a percentage of GDP was 30%. Today, it is 130%. With this massive run up in valuations, Marc believes US equities are the most expensive asset class in the world. As such, future returns will be much lower than they have been up to now.
Economic growth in emerging markets is the underlying reason behind this rally. In 1960, China and India accounted for just 5% of global GDP; now they are at 30%. One of the reasons for this massive decline is the huge increase in resource imports by China. Today, China accounts for half of all industrial commodity imports, a 25-fold increase since 1970.
According to the expert, investors would be wise to avoid US equities going forward and instead focus on emerging markets. Marc further added “If I had to choose only one sector to invest in, it would be resources. Right now, the resource sector is very depressed and there are many opportunities.”
Read more at Value Walk.