How to ride the ‘Third Wave’ to potential life changing gains

Monday, 10 December 2018
Melbourne, Australia
By Bernd Struben

  • The first of our new Elite Portfolio series
  • ‘This Labor Proposal Could Sink the Property Market’

Living in Australia, it’s easy to take what was once considered miraculous for granted.

The ever-growing list of marvels we no longer bat an eye at is lengthy.

And I’m not just talking about the smartphone in your pocket. Or space travel. Or genetically tailored medical treatments.

Even the humble air conditioner that keeps you cool on those blistering summer days was considered a technological revolution not so long ago.

Or the lightbulb that dispels the dark at the flick of a switch, enabling us to go about our lives uninterrupted at all hours of the day and night.

It’s easy to accept these mod-cons as our birthright. Simple to forget that all of it — everything — hinges on electricity. Though when the power goes out and you can’t charge your smartphone or find your matches — let alone your candles — the truth can come crashing home.

When you think about all the incredible changes electricity has brought to modern nations, it’s astounding that only 139 years have passed since Thomas Edison produced his first reliable, long-lasting light bulb over in the US.

That was in 1879.

By 1882, the Edison Electric Illuminating Company of New York introduced electric lights to areas of Manhattan. Other major cities followed. But rural areas lagged behind.

According to NPS.gov, by 1925 only half of US homes had electricity. It took until the 1950s for that number to approach 100%.

The life changing power of electricity was not lost on Australians.

As this Scholz Electrical report notes:

Australia was not left behind when it came to the use of electricity and it is recorded that Brisbane was one of the first cities in Australia to use electricity commercially, in 1882, making it an important event in Australian history.

Looking at the map of Australia, it seems strange, that a number of country towns or cities had electricity before most of the capital cities. The town of Nhill, in the central west of Victoria had a private supply in 1888, until taken over by the Shire Council in 1921…

The capital cities that followed after Brisbane, were Melbourne and Perth in 1894, Adelaide in 1899, Sydney 1904 and Hobart in 1905.

Today, of course, every Aussie that wants it — and pays their rather exorbitant bills — can plug into the grid. Even in the most remote locations, solar and wind energy can power up battery storage.

But that’s not true across much of the rest of the world.

Take India for example.

The nation of 1.34 billion people has a GDP of US$2.9 trillion. That makes it the sixth largest economy in the world. And according to Focus Economics, India is likely to surpass the UK by 2020 to take the number five spot, having only just surpassed France this year.

Astoundingly, India achieved this rapid growth despite hundreds of millions of Indians lacking access to electricity.

But that’s all changing.

From Bloomberg:

‘[Prime Minister Narendra] Modi set out to electrify nearly 40 million homes last year to fulfill [sic] his campaign promise of reliable electricity for every citizen. That has been now pruned to 30 million. Nearly 72 percent of the revised number of homes have already received a connection, latest government data shows. The country is on pace to electrify all households by Dec. 31, Power Minister R.K. Singh said last month. The next deadline is for 24×7 access to power by March 31…

The International Energy Agency in its latest annual World Energy Outlook hailed India as a “star performer” in global efforts toward universal electrification.’

It’s taken India a long time to play catch-up with developed nations. But Modi’s massive electrification drive is likely to be a game changer.

With households across the world’s second most populous nation soon able to plug into the grid, India’s phenomenal growth story could become one for the record books in the decade ahead.

This story is only just starting to gain traction with investors.

And it forms the crux of the Third Wave Portfolio, put together by Port Phillip Publishing’s own team of leading analysts.

More, right after the markets…

(Or you can get the full story on the Third Wave Portfolio right now by clicking here.)

Markets

Over the weekend, the Dow Jones Industrial Average closed down 558.72 points, or 2.24%.

The S&P 500 fell 62.87 points, or 2.33%.

In Europe the Euro Stoxx 50 index finished up 12.59 points, or 0.41%. Meanwhile, the FTSE 100 gained 1.10%, and Germany’s DAX closed down 22.89 points, or 0.21%.

In Asian markets, Japan’s Nikkei 225 is down 489.96 points, or 2.26%. China’s CSI 300 is down 1.17%.

In Australia, the S&P/ASX 200 is down 117.79 points, or 2.07%.

On the commodities markets, West Texas Intermediate crude oil is US$52.42 per barrel. Brent crude is US$61.68 per barrel.

Turning to gold, the yellow metal is trading for US$1,250.16 (AU$1,739.96) per troy ounce. Silver is US$14.63 (AU$20.36) per troy ounce.

One bitcoin is worth US$3.528.28.

The Aussie dollar is worth 71.85 US cents.

The first of our new Elite Portfolio series

Last week I wrote to you about two mega trends of the late 20th and early 21st centuries.

These are what our select team of editors and analysts label the ‘First Wave’ and ‘Second Wave’.

The First Wave was Japan’s meteoric rise to prosperity.

The Second Wave was China’s equally miraculous growth story.

Investors who targeted the right stocks in these markets and held on for the ride up walked away with gains of thousands, even tens of thousands of percent.

I won’t rehash the details today. You can find those in our website archives. (Or by clicking here.)

Today, I’ve been given the green light to reveal what our team calls the ‘Third Wave’…the next growth megatrend. And that Third Wave is India.

A new report by Oxford Economics forecasts that all of the top 10 cities for fastest economic growth over the next 16 years will be India. That’s right. Every one.

From Bloomberg:

Surat, a diamond processing and trading center in the western state of Gujarat, will see the fastest expansion through 2035, averaging more than 9 percent, Richard Holt, Oxford’s head of global cities research, wrote in a report. All of the 10 fastest over that period will be in India.’

I’ll be honest here. I’d never heard of Surat before this morning. But I sure won’t forget the name now.

A 9% annual growth rate for the next 16 years! That’s enough to see Surat’s GDP rocket by 300% in that time. Well-placed small companies operating in that environment could see their share prices shoot up 10- or 20-times that much…or more.

But as you can see in the table below, Surat is far from the only Indian city leading the next mega growth trend.



chart image

Source: Oxford Economics / Bloomberg
Click to enlarge


Even at the bottom of list and coming in at number 10, Vijayawada is still forecast to see annual growth of 8.16%…until 2035.

This massive economic growth outlook is, in part, to thank for a record setting year for India deals.

Also from Bloomberg:

In a record year for India deals, the rock n’ roll loving leader of Goldman Sachs Group Inc.’s local unit helped broker some of the biggest transactions as Walmart Inc., ArcelorMittal and Berkshire Hathaway Inc. joined a buying spree in the country. Next year will be at least as busy, he says.

Goldman advised on two of the three biggest acquisitions involving Indian companies in 2018, when $128 billion transactions were announced.’

You can see just how rapidly deal flow has been ramping up in the graph below:



chart image

Source: Oxford Economics / Bloomberg
Click to enlarge


Clearly the ‘smart money’ is taking notice of the huge opportunities presented by the ‘Third Wave’.

And when you’re talking about smart, long term investing money, it’s hard to beat Warren Buffett.

Here’s what the AFR reported on the Oracle of Omaha’s India dealings over the weekend:

Warren Buffett’s investment vehicle Berkshire Hathaway has been linked to a 10 per cent stake in Kotak Mahindra, the third biggest Indian bank by market capitalisation…

The bank’s Mumbai-listed shares leapt 8 per cent on Friday, the most in five years.

I imagine you can see by now why Port Phillip Publishing’s handpicked team of analysts focused squarely on India to construct the Third Wave Portfolio.

If you followed along last week, you’ll know this portfolio consists of 10 stocks. You’ll likely never have heard of most of them…yet. But if these stocks ride the mega growth trend of India as expected, some (if not most) of them could be household names inside the next decade.

That timeline is important to keep in mind.

While some of these stocks could see big gains a lot sooner than that, the intention is to hold onto them through the 2020s…and cash in for potentially life changing gains in 10 years.

Of course, there are no guarantees. Investing is inherently risky. You can lose money just as easily as you can make it…or more so.

That’s why you should carefully read all the rationale behind our editors’ exclusive new Third Wave Portfolio before considering investing in it.

But I have to warn you. They make a compelling case.

And the best news is that the Third Wave Portfolio is only the first of more to come in our brand new Elite Portfolio series.

But the special offer to access this portfolio series ends at midnight tonight.

I recommend you put a bit of uninterrupted quiet time aside and have a full read of what’s on offer.

You can get all the details on that offer here.

Finally, here’s the latest in potential woes facing Aussie property, from The Australian Tribune:

‘This Labor Proposal Could Sink the Property Market’

Negative gearing, in a nutshell, is a policy that allows investors to deduct losses on their properties from their tax bills. Meaning if your interest and expense payments exceed your rental income, you pay less tax.

This has been a huge boon to many property investors, who were able to reduce their tax bills even as the values of their investment properties skyrocketed.

It has also served to prop up Australia’s increasingly shaky…’

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd