Written by Sara Nunnally, Editor, Inside Investing Daily, insideinvestingdaily.com
The next year will be painful. But if this controversial research is right, it will be the year investors have the opportunity to build true, long-lasting wealth.
Happy new year, everyone! I hope you had a safe and fun holiday, with many more to come…
Let’s get down to work, because 2012 is going to be a busy year. In Macro Trader, I’ve been researching a theory called K-Cycles. This theory was developed by Nikolai Kondratiev, a Russian economist in the Stalin era, and he was killed for his research.
In a nutshell, Kondratiev said that the economies move in long waves, with extended booms and busts that range between 45 and 60 years.
His research was so accurate that he was able to predict the Great Depression.
Stalin loved this idea… that capitalism was flawed and destructive. It fit perfectly into the communist agenda.
But what Stalin didn’t like was the idea that economies would be reborn after a collapse, and the cycle would start over. This part of his theory got Kondratiev thrown in prison for eight years, and ultimately executed.
Here’s what’s so powerful about K-Cycles… No matter what governments do, they can’t stop the bottom of the cycle from coming.
Now, for some investors, this might seem really scary. That’s why we’ve been bombarding you with protective strategies over the past couple of years.
We see it as a huge opportunity that investors haven’t seen in decades… perhaps even since the Great Depression.
According to Kondratiev’s research, 2012-2015 is the end of the fifth cycle.
In other words, the bottom is here.
For investors, there is no better news. Not because it’ll be the end of the pain — far from it. In fact, the next three years could be the most painful we’ve had in a long, long time. But this is when true wealth is created.
More millionaires were created during the Great Depression than at any other time in our history.
Like I said, 2012 is going to be a busy year…
And we have an idea of where the next cycle is going to take us. The first five K-Cycles were the steam engine and cotton; railways and steel; electrical engineering and chemicals; petrochemicals and automobiles; and information technology and housing.
We think the sixth cycle is going to focus on global infrastructure and the health industry.
Think of it as the bridges and biotech era. The globalization of our markets, the growth of emerging market economies and populations and the urbanization of communities require these two things almost more than anything else.
And don’t think that food and agriculture are outside of this realm.
There are so many food storage facilities being constructed in the U.S. that storage capacity is at the highest it’s been in 20 years.
And biotechnology is being used to create genetically modified crops that are resistant to pests, drought and diseases.
Global infrastructure is going to be a dynamic sector for the next three to five years. Kondratiev’s theory says that demand for commodities starts the cycle over, and this sector uses a lot of commodities! From steel to copper to cement to energy, there are so many ways to play…
I like builders of things — bridges, power plants, pipelines, water treatment facilities, airplanes and ports.
The companies that build things are going to be in high demand, particularly from growing emerging markets, such as China and India, even Latin America and certain parts of the Middle East.
I’ve got my Macro Trader subscribers in Boeing (BA:NYSE), but this is the first of many companies we’re looking into to take advantage of this long-term trend.
The health industry is going to be equally dynamic. The discoveries and strides we’re making in drug therapies are changing the face of life-threatening conditions like cancer and AIDS. Add to that the huge wave of baby boomers starting to exit the workforce, and the health industry is going to experience unprecedented demand for everything…
Long-term care facilities, hospitals, medications for heart conditions and diabetes… It’s a huge arena for investors.
These two sectors are my best picks for 2012. They could be entering a multidecade boom, as Kondratiev’s next cycle comes into focus. It’s important to note that the next few years are going to be volatile. The bottom is never smooth, so investments in both of these industries are going to be just as volatile until the next cycle gains some traction.
Keep all of your protection in place… but be ready to move into global infrastructure and the health industry.
Publisher’s Note: If you want to learn more about Kondratiev and how his research affects today’s investor, follow this link.
