Between optimism and pessimism

October 29, 2010

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell,” wrote late billionaire investor and philanthropist John Templeton in 1994.


Investors might have done exactly that. After hitting a trough in March 2009, world stocks have gained  83 percent, with many analysts and investors saying that the rally may have further to run.

But with valuations becoming less attractive compared with the absolute trough last year, what should investors buy now?

Scott Phillips, portfolio manager and principal with Lauren Templeton Capital Management, writes in his latest book the following investment themes would maintain their fundamental appeal over the next 5-10 years.

Agribusiness. Booming economies in the developing world especially in China and India helped improve the lifestyles and diets, with protein intakes in these countries rising dramatically. It might be reasonable to expect protein in particular poultry to experience a solid long-term growth pattern thanks to its low cost and healthier attributes. Increasing need for convenience – such as ready-to-eat meals- in the Chinese diet also bolsters demand.

Aquaculture. Otherwise known as fish farming, aquaculture in the subcategories of diadromous fishes and marine fishes present growth opportunities. Salmon is particularly attractive as its cost of farming and prices have dropped in the past 15-20 years. Chile is a major player here but an outbreak of a biological salmon disease means there’s greater undersupply and the scope to boost production elsewhere, like in Norway.

Education. The percentage of students enrolling in higher eduation jumped to 23 percent in 2007 from just 3 percent in 1990 in China, and 30 percent in Brazil from 11 percent. This underscores a desire in emerging nations to pursuit learning and education to become more competitive in the global economy.

Rare earth. Minerals vital for electronics manufacturing — largely controlled by China — presents a growing opporutunity to exploit the rapid growth and demand for technology.

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