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Sunday, July 5, 2009

Optimism

I would imagine those reading my blog may get a tad bit depressed, I highlight negative news surrounding the US & World economy. If you know me, I try to be optimistic. However in this blog forum I tend to focus on the negative. The primary reason is I don't get a sense of urgency from people I meet about their investments and the economy. In this blog I am trying to highlight the unprecedented risk that the US financials and parts of the world economy face. The US media is trying to put the situation in the best light, so I am attempting to put a more realistic spin on the information you read.

However, I do have optimism, and I wanted to take time to explain where my optimism rests, and how this may affect future investing.

First, lets start with the USA and other world government debt system, fiat currencies, bank financial, and real estate. I see nothing but doom and gloom for year(s) to come in general.

Why? Well read my blog both in the past and the future, and I believe I am justified in this view. So I'll leave it at that. Where am I optimistic?

Two areas, natural resources and technology. Sure, there may be may other area's that will fare well in the decade to come, but both of these area's I believe have the greatest potential for upside. Other areas such as healthcare, the upside is tempered with government intervention.

Natural Resources.
No matter what world governments do to "cover up" bank issues, print money to generate unprecedented debt, or other tricks, there is always one thing everyone needs, and that is natural resources. Food, Energy, base metals, precious metals, etc are one common thread all living humans need and desire to have more of. So to "Store wealth" these are areas that over the 10+ years to come should fare well. Other areas such as precious metals have the added advantage of also doing well in times of panic. All resources should do well as India/China (2.3 billion people vs America's 300 million) as people "want more stuff". Please see other entries on this topic.

Technology
There is no question, we are in a revolution driven by science advancement and technological innovation moving forward at a rate unprecedented in human history. I work in Information Technology with bleeding edge business infrastructure including virtualization, enterprise work management (ESB, Workflow processing), open source software, and numerous innovations that would take a book to just scrape the surface of.
I am witnessing in my industry technology advancing so fast, that the business environment is becoming further behind the bleeding edge of technology. There just isn't enough time for traditional businesses to keep up, much less individuals to adjust unless, technology is their primary focus.
Technology is also enabling world collaboration in ways never deemed possible. Individuals from anywhere in the world can equally contribute to a work effort providing they have reliable internet access.
More companies are relying a work force that never leave their house or country to contribute to work efforts. This also has the effect of improving business operations improving effectiveness and reducing costs as those who can contribute "for the least cost" are used.
I have many issues surrounding outsourcing as it exists today, that is for a different blog. But in concept, outsourcing allows those who are willing and able to work, contribute, for less cost, to assist those who want their help. It is, the flattening of the world in ways never possible before. I highly recommend the book "The world is flat" for more on this topic.

The point is, innovation, world collaboration, Moore's law in action, and the ripple effect of technological innovation is beyond conception. In less than 5 years, technology that links the internet to glasses you are wearing to augment your interaction with the world IS possible (link). The effects of this innovation is so unpredictable, but we can all agree in general POSITIVE advancement.

As technology advances into other fields such as BioTech, Robotics, Alternative energy, and other sectors that are in their infancy, (Military...) we will see advancements that may fundamentally shift the world focus on what is important.

Unfortunately, I don't see any of this avoiding the prospects of the world rectifying it's debt system that is sick, and needs to be reevaluated to realistic valuations. However, I have hope that once the sickness is ADDRESSED and not avoided by paper manipulations, the world economy may recover quicker than anyone could imagine. This is what makes me so energetic in this blog endeavor, to watch how people address reality as the "bad" is realized, and afterward how quick the world may bounce into the next mega bull market. With my current knowledge however, I fear I will not see this until 10+ years from now, but I keep looking for a sign that I am wrong, and that will be when change includes proper handling of finances.

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