The above is not a recommendation of any particular security or investment strategy. It is simply a statement of personal opinion.
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Friday, November 19, 2010
Growth in China is Self-Defeating; Growth in Innovation is Self-Reinforcing
The perception that growth can only be found in the emerging markets is slowly eroding. China is increasingly faced with high inflation, infra-structure challenges, a weak consumer segment, political pressures, environmental threats, unfavorable demographics and it is bidding against itself in the commodity markets. Technology/innovation ( nanotechnology, life sciences and information technology in particular ), on the other hand, is accelerating, converging and reinforcing itself. The below chart shows that the NASDAQ 100 (a proxy for innovation) has outperformed the Emerging Market Index (very sensitive to economic activity in China) over the past 3 years and I believe this will continue for several years to come: