SCOTT PICKEN
PROPERTY GOING GLOBAL
after Bin Laden, it had flags, and needed to connect those flags in order
to develop a likely probability. Looking at photo raphs of the village
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and compound in which the CIA felt Bin Laden might live, and when
they deciphered the houses he occupied, the head of the CIA called for a
meeting of all the people involved in hunting Bin Laden down. Analysts
had determined the most probable house Bin Laden was in, because
photos showed three women in the courtyard and only two men (flags).
But, because there were three women, there was a good chance there were
three men (probability). Analysts pointed out, there were no incoming
cell-phone or telephone calls to the house (flag), which, by experience
indicated there was a senior leader living there (probability).
Based on those two points, which I called flags, the probabilty that
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Bin Laden was in that particular house was 60% to 80%, and they went
in and killed him.
Our scenario-based model tries to give investors that type of range
when investing in equities, buying bonds, or buying prop rties, let alone
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choosing which market or country to invest in.
That’s how this model works, and here are four scenarios we’ve
developed for the global economy. By studying these scenarios and
estimating their chances of occurring, we have been able to take much
of the uncertainty out of investment in foreign mar ets, business or
k
property, or to, at least, give our investors a good sense of where to go and
where to invest.
hard times in America, we’re looking at probably a 2% economic growth
rate, as opposed to Europe, which is less than 1%. It will be characterised
by corrugated ups and downs in the global economy.
In early 2013 Clem Sunter rated the hard-times scenario at about
40%. Go to www.mindofafox.com, to get the undated probabilities.
Clem Sunter’s Global Scenarios
Scenario 2: Emerging Economies Grow Strong
Ultra-Violet
The second scenario sees the advanced economies like America and
Europe continuing along at an economic growth rate of 1% to 2%, but
the emerging economies – China, India, Africa and South America –
growing three times faster.
Obviously, the strategy in this scenario is to chase the wheels in
emerging economies. Africa, for example, has a comletely different
p
image now, as opposed to the European view of the continent in 2000,
when economists were calling it “the hopeless continent”. Now, because
of its younger demographics, many American and European companies
are all over Africa. But Clem Sunter rates the probabilities at 30%. If
China is propelled to grow quickly, then obviusly all the countries
o
selling to China are about to grow at a rapid rate. But if China stumbles,
then everyone is going to be in hard times.
So, it is important to watch China. The critical flags are its GDP growth
and its banks.
Scenario 1: Hard Times
In the 25 years from 1982 to 2007, we’ve had a strong economy, but
the second part of that economic boom was artifiial, because it was
c
essentially propelled by credit. Now it’s payback time, and we have a
mortgage disaster which led to the financial crash. Now the scenario is all
about sovereign debts and governments being hopelessly ill-adapted, and
trying to get rid of that deficit, and pay off the debt. This will continue to
have a negative impact on the global economy.
So, the hard-time scenario looks at a flat growth curve, as it is in Japan
and, say, 0-1% for the next 10 to 20 years. It is also based on the aging
of the European population and that of Japan. The US is in better shape,
as it has younger demographics. The Latino and the African-American
populations in US are still growing quite quickly. When we talk about
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Scenario 3: US Cheap Money Policy Pays Off
New Balls, Please
This scenario is where many analysts will be proved wrong, and the head
of the US Reserve Bank is right, as the US “cheap money” policy pays
off. The US goes into full recovery mode, and this drives the whole world
upward. There will be a multi-polar global economy, with more &