Harry Dent says India will experience massive growth because of demographics
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Harry Dent: India a Better Long-Term Bet than China
IU.com: In your latest book, you show different demographic trends favoring emerging markets over the next several years, dont you?
Dent: The strongest demographic trends countries with growing workforces and growing consumer patterns are going to be in the emerging markets. Latin America and much of Asia is largely urbanized: India is a little over 30 percent; China is just under 50 percent but Brazil is over 80 percent. So, emerging markets' growth is very tied to this move towards greater urbanization.
IU.com: What regions or countries are behind the curve in terms of urbanization?
Dent: If you take away oil, the Middle East is largely a third-world region. And most of Africa is still struggling to become more urban. So, theyre more frontier markets now. But our new ETF is only interested in investing in countries clearly on the way up.
IU.com: What is your favorite country on a longer-term basis at this point?
Dent: If I had to pick one country for the next 30 to 40 years, itd be India. It wouldnt be China. Their demographics are going to work against them. After 2020, urbanization will come at a slower rate since younger people generally are the ones to move the fastest out of rural areas. Chinas policy of one child per family, which started in the early 1970s, will begin to catch up with them between 2015-2020. Someone said China is going to get old before they get rich, and we agree with that. By contrast, Indias demographics wont peak until about 50 years after those of China.
IU.com: Does the new ETF follow your basic investment process?
Dent: It is simply a momentum model weve tracked for years. But its different than what weve done in the 1980s and 1990s the methodology we tried to use in the past with some of our separate accounts and the old AIM mutual fund. We were subadviser to that fund and AIM just didnt listen to us. The fund was supposed to be a blend of our models and those developed by AIM. But when markets crashed in 2000-2002 and our models were very cautious, the AIM models were favored and the fund remained quite more aggressive in stocks than our models preferred. That fund ended up getting merged into another one and we learned a valuable lesson: Joint ventures arent the best way to go with fund portfolios. Weve got well-tested, momentum-based models and its either got to be our way or the highway in terms of working with fund portfolios.
IU.com: Is that why you decided to go with an ETF structure?
Dent: The ETF structure is very low-cost compared to similar hedge fund and mutual fund strategies. And theyre more widely available compared to hedge funds and mutual funds. Anybody can add our ETF to their portfolio. And weve got control over it and nobody else can tell us how to manage our investment model.
IU.com: Can you explain the process that this model follows?
Dent: This is a quantitative-based model. It looks at the universe of developed and emerging markets. It also includes commodities. So it has latitude to go anywhere. The key is how it decides to pull out of sectors and countries. The advantage of any momentum model is that when things are going well, the model does, too. But, of course, the difficulty is moving out of an area of the market, or back in, when things arent going so well. Theres always going to be a lag youd have to be a genius to time markets perfectly.
But this ETFs model isnt going to act like an actively managed hedge fund or mutual fund. This ETF will be on a monthly rebalancing schedule, so theres going to be a lag time between shifts. So the key is going to be to get the general trends right. Were not trying to time exact tops and exact bottoms. The model has some technical factors built into its methodology. But technical analysis isnt always right. So, it also includes elements of fundamental analysis. We believe this is the best model for a market thats heading towards an extended winter.
IU.com: In your latest book, you show different demographic trends favoring emerging markets over the next several years, dont you?
Dent: The strongest demographic trends countries with growing workforces and growing consumer patterns are going to be in the emerging markets. Latin America and much of Asia is largely urbanized: India is a little over 30 percent; China is just under 50 percent but Brazil is over 80 percent. So, emerging markets' growth is very tied to this move towards greater urbanization.
IU.com: What regions or countries are behind the curve in terms of urbanization?
Dent: If you take away oil, the Middle East is largely a third-world region. And most of Africa is still struggling to become more urban. So, theyre more frontier markets now. But our new ETF is only interested in investing in countries clearly on the way up.
IU.com: What is your favorite country on a longer-term basis at this point?
Dent: If I had to pick one country for the next 30 to 40 years, itd be India. It wouldnt be China. Their demographics are going to work against them. After 2020, urbanization will come at a slower rate since younger people generally are the ones to move the fastest out of rural areas. Chinas policy of one child per family, which started in the early 1970s, will begin to catch up with them between 2015-2020. Someone said China is going to get old before they get rich, and we agree with that. By contrast, Indias demographics wont peak until about 50 years after those of China.
IU.com: Does the new ETF follow your basic investment process?
Dent: It is simply a momentum model weve tracked for years. But its different than what weve done in the 1980s and 1990s the methodology we tried to use in the past with some of our separate accounts and the old AIM mutual fund. We were subadviser to that fund and AIM just didnt listen to us. The fund was supposed to be a blend of our models and those developed by AIM. But when markets crashed in 2000-2002 and our models were very cautious, the AIM models were favored and the fund remained quite more aggressive in stocks than our models preferred. That fund ended up getting merged into another one and we learned a valuable lesson: Joint ventures arent the best way to go with fund portfolios. Weve got well-tested, momentum-based models and its either got to be our way or the highway in terms of working with fund portfolios.
IU.com: Is that why you decided to go with an ETF structure?
Dent: The ETF structure is very low-cost compared to similar hedge fund and mutual fund strategies. And theyre more widely available compared to hedge funds and mutual funds. Anybody can add our ETF to their portfolio. And weve got control over it and nobody else can tell us how to manage our investment model.
IU.com: Can you explain the process that this model follows?
Dent: This is a quantitative-based model. It looks at the universe of developed and emerging markets. It also includes commodities. So it has latitude to go anywhere. The key is how it decides to pull out of sectors and countries. The advantage of any momentum model is that when things are going well, the model does, too. But, of course, the difficulty is moving out of an area of the market, or back in, when things arent going so well. Theres always going to be a lag youd have to be a genius to time markets perfectly.
But this ETFs model isnt going to act like an actively managed hedge fund or mutual fund. This ETF will be on a monthly rebalancing schedule, so theres going to be a lag time between shifts. So the key is going to be to get the general trends right. Were not trying to time exact tops and exact bottoms. The model has some technical factors built into its methodology. But technical analysis isnt always right. So, it also includes elements of fundamental analysis. We believe this is the best model for a market thats heading towards an extended winter.
TechLahore
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^^ You should always believe the opposite of what Harry Dent says. I own several of his books and there has hardly been anyone more wrong on the future than him. His record on demographic based reasoning, which he is now applying to India, is trash of a very special variety.
For example, according to his "Roaring 2000s" intro, which he wrote in 1999:
"In this one [Roaring 2000s], he looks ahead to the new millennium and claims that the Dow may reach as high as 35,000 within the next decade, due in large part to the changing demographics of baby boom investors."
Amazon.com: The Roaring 2000s: Building The Wealth And Lifestyle You Desire In
A commenter on Amazon states some other interesting factoids about what has happened to funds managed as per Harry Dent's predictions. Both have gone bust. This is from a review of "The Great Depression Ahead"
Harry Dent is NOT an economist, he works with demographics. 2nd, in his last book "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010" he predicted the Dow to be 40,000 in 2009. You call that spot on?? Is that just a finer detail?? Was 2006 the start of the Greatest Boom in History as the title indicates? Harry Dent is very good at putting quotes in books and his newsletters that he can draw on as being right no matter what happens much like a psychic reading. When he has made big calls to the extent of making it the title of a book, he was dead wrong. Both AIM and Mass Mutual once had mutual funds based on the Dent philosophy and were sub-managed by him. Both have gone bust as being some of the worst performing mutual funds in recent history. If you followed his investment advise over the last 5 years you would be flat broke by now.
Amazon.com: The Great Depression Ahead: How to Prosper in the Debt Crisis of 2010 - 2012 (9781416588993): Harry S. Dent:
Net-net, whatever Harry Dent is selling, you are best advised to short it like HELL.
For example, according to his "Roaring 2000s" intro, which he wrote in 1999:
"In this one [Roaring 2000s], he looks ahead to the new millennium and claims that the Dow may reach as high as 35,000 within the next decade, due in large part to the changing demographics of baby boom investors."
Amazon.com: The Roaring 2000s: Building The Wealth And Lifestyle You Desire In
A commenter on Amazon states some other interesting factoids about what has happened to funds managed as per Harry Dent's predictions. Both have gone bust. This is from a review of "The Great Depression Ahead"
Harry Dent is NOT an economist, he works with demographics. 2nd, in his last book "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010" he predicted the Dow to be 40,000 in 2009. You call that spot on?? Is that just a finer detail?? Was 2006 the start of the Greatest Boom in History as the title indicates? Harry Dent is very good at putting quotes in books and his newsletters that he can draw on as being right no matter what happens much like a psychic reading. When he has made big calls to the extent of making it the title of a book, he was dead wrong. Both AIM and Mass Mutual once had mutual funds based on the Dent philosophy and were sub-managed by him. Both have gone bust as being some of the worst performing mutual funds in recent history. If you followed his investment advise over the last 5 years you would be flat broke by now.
Amazon.com: The Great Depression Ahead: How to Prosper in the Debt Crisis of 2010 - 2012 (9781416588993): Harry S. Dent:
Net-net, whatever Harry Dent is selling, you are best advised to short it like HELL.
karan.1970
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I agree on Mr Dent's past record with you.. But since its about India, and him being so wrong about future in past, I am hoping law of averages will catch up with him and get him to be right this time around ...
Can't fault me for being optimistic....
TechLahore
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^^ I hope you are optimistic with your words, but conservative with your actions. Would hate to see you waste good money over nothing more than the lame advice of a well known charlatan.
Nothing reduces population than economic growth...even within India the more prosperous Southern States have much less population growth than the poor north.
TechLahore
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^^ True, but that will take some time coming. I think more proactive measures are called for. At times, I consider Pakistan overpopulated... and we have less than half the population density of India!!!
Roach Says India May Outperform Others in Asia-Pacific Region
Stephen Roach, chairman of Morgan Stanley Asia, is more optimistic about economic growth prospects in India than China, saying the country may outperform others in the Asia-Pacific region.
India is a more balanced economy than the rest of export- led Asia, Roach told reporters in Mumbai today. India could actually outperform at the margin the rest of the region.
Stephen Roach, chairman of Morgan Stanley Asia, is more optimistic about economic growth prospects in India than China, saying the country may outperform others in the Asia-Pacific region.
India is a more balanced economy than the rest of export- led Asia, Roach told reporters in Mumbai today. India could actually outperform at the margin the rest of the region.
Davos 2010: The West accepts India and China as equals
Once again, China and India are high on the agenda at the World Economic Forum.
But something is different. Once they were seen as promising markets - China as workbench and India as services provider - for Western companies.
The past 18 months have changed all that.
At long last, both countries - and other emerging markets like Brazil - are being accepted as true equals.
What a difference a global financial crisis can make.
'China-centric world'
In previous years, Chinese and Indian executives tended to display a prickly nationalism. Speaking to them, I always had the feeling that they tried to prove their importance.
Not anymore.
"Post-meltdown, post-recession, there's a positively different expectation of India," says Anand Mahindra, managing director of automotive group Mahindra and Mahindra.
The power shift is raising expectations.
"India wants to be part of the spec sheet. Are we there when the terms are being set for any major global issue?" asks Mr Mahindra.
In one of the meeting rooms here in Davos, a wall is dominated by a stylised map of the world. It's a look from high above the south pole. Latin America, Africa and Asia loom large.
The US and Western Europe look rather puny. And the UK is a mere speck on the wall.
Once, "the United States could export its recession around the world," says Stephen King, the group chief economist of HSBC bank.
This crisis is different. Emerging economies, especially China and India, managed to avoid the worst of the contagion.
It's "not perfect decoupling," says Mr King, but over the long-term the crisis has sown the seeds for a move towards a "China-centric world rather than a US centric world".
New trading bloc
Stuart Gulliver, executive director at HSBC, sees a new economic bloc emerging that would sideline the US and Western Europe - stretching from China, Asia Pacific, the Middle East and Africa to Latin America.
As a bloc, these countries have "a lot of investable capital, huge commodity wealth, huge production capital and huge demand".
It's an area of emerging countries with so much domestic demand that a crisis in the West may cause it to stutter, but not to grind to a halt, argues Mr Gulliver.
Mr King points to the last three months of 2009, when China's economy (and its exports) rebounded, even when US consumer demand did not.
The crisis has tipped the power balance.
This makes emerging economies a great place to invest, say private-equity investors like David Rubenstein of the Carlyle Group.
Sir Martin Sorrell, chief executive of advertising group WPP, says that if you're running a global company, "there's no choice, you have to build your operations in these high-growth areas."
China versus India?
But it is here, he says, where China has the edge.
"Without infrastructure it won't work. And that's the big difference between India and China."
Speak to any corporate boss from India, and they will admit that infrastructure problems - and bureaucracy - are holding the country back.
Take Priya Hiranandani-Vandrevala, the chief executive of Hirco, India's largest residential property developer.
Her company builds homes for the emerging middle classes - developments of 10,000 units for 50,000 people - schools, hospitals and sewage plants included.
Getting such a project built can take eight to 12 years, she says, and requires a lot of work.
India's infrastructure is "frightfully underdeveloped," she says, and it is little surprise that "India has the third-lowest cement demand per capita in the world".
But her industry also demonstrates how India's economy is changing.
When the recession struck, the Indian real estate market "completely shut down for three to five months at the beginning of 2009," she says.
Then demand picked up sharply again - driven not by buyers working for Western companies but by truly domestic demand.
After all, according to Rajat Gupta of consulting firm McKinsey, India has the potential for the largest middle class in the world.
India is a country that is turning "one billion people into one billion consumers," says Manvinder Banga, the president of Unilever's global food and personal care division.
It will be these consumers, that will truly shift the world's economic power balance. Maybe not this decade.
But if Davos is any guide, it won't take much longer.
Once again, China and India are high on the agenda at the World Economic Forum.
But something is different. Once they were seen as promising markets - China as workbench and India as services provider - for Western companies.
The past 18 months have changed all that.
At long last, both countries - and other emerging markets like Brazil - are being accepted as true equals.
What a difference a global financial crisis can make.
'China-centric world'
In previous years, Chinese and Indian executives tended to display a prickly nationalism. Speaking to them, I always had the feeling that they tried to prove their importance.
Not anymore.
"Post-meltdown, post-recession, there's a positively different expectation of India," says Anand Mahindra, managing director of automotive group Mahindra and Mahindra.
The power shift is raising expectations.
"India wants to be part of the spec sheet. Are we there when the terms are being set for any major global issue?" asks Mr Mahindra.
In one of the meeting rooms here in Davos, a wall is dominated by a stylised map of the world. It's a look from high above the south pole. Latin America, Africa and Asia loom large.
The US and Western Europe look rather puny. And the UK is a mere speck on the wall.
Once, "the United States could export its recession around the world," says Stephen King, the group chief economist of HSBC bank.
This crisis is different. Emerging economies, especially China and India, managed to avoid the worst of the contagion.
It's "not perfect decoupling," says Mr King, but over the long-term the crisis has sown the seeds for a move towards a "China-centric world rather than a US centric world".
New trading bloc
Stuart Gulliver, executive director at HSBC, sees a new economic bloc emerging that would sideline the US and Western Europe - stretching from China, Asia Pacific, the Middle East and Africa to Latin America.
As a bloc, these countries have "a lot of investable capital, huge commodity wealth, huge production capital and huge demand".
It's an area of emerging countries with so much domestic demand that a crisis in the West may cause it to stutter, but not to grind to a halt, argues Mr Gulliver.
Mr King points to the last three months of 2009, when China's economy (and its exports) rebounded, even when US consumer demand did not.
The crisis has tipped the power balance.
This makes emerging economies a great place to invest, say private-equity investors like David Rubenstein of the Carlyle Group.
Sir Martin Sorrell, chief executive of advertising group WPP, says that if you're running a global company, "there's no choice, you have to build your operations in these high-growth areas."
China versus India?
But it is here, he says, where China has the edge.
"Without infrastructure it won't work. And that's the big difference between India and China."
Speak to any corporate boss from India, and they will admit that infrastructure problems - and bureaucracy - are holding the country back.
Take Priya Hiranandani-Vandrevala, the chief executive of Hirco, India's largest residential property developer.
Her company builds homes for the emerging middle classes - developments of 10,000 units for 50,000 people - schools, hospitals and sewage plants included.
Getting such a project built can take eight to 12 years, she says, and requires a lot of work.
India's infrastructure is "frightfully underdeveloped," she says, and it is little surprise that "India has the third-lowest cement demand per capita in the world".
But her industry also demonstrates how India's economy is changing.
When the recession struck, the Indian real estate market "completely shut down for three to five months at the beginning of 2009," she says.
Then demand picked up sharply again - driven not by buyers working for Western companies but by truly domestic demand.
After all, according to Rajat Gupta of consulting firm McKinsey, India has the potential for the largest middle class in the world.
India is a country that is turning "one billion people into one billion consumers," says Manvinder Banga, the president of Unilever's global food and personal care division.
It will be these consumers, that will truly shift the world's economic power balance. Maybe not this decade.
But if Davos is any guide, it won't take much longer.
What proactive measures...nature balances itself out. India has an incredible amount of arable land(I believe the second highest percentage of arable land after the US in the world) and water sources. Both of which will decrease over the next few years with the growth of cities and global warming so the population will steady itself.
TechLahore
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Geez... are you for real? "nature balances itself out"? With that sort of remarkable appreciation for the problems that stare humanity in the face, I hope you aren't employed by a national planning commission somewhere!
India has an incredible amount of arable land - second after the US? Ok. If you haven't noticed, India also has a population more than 4 times the US population. And a fraction of its land...
On average, an American citizen has THIRTEEN TIMES the amount of land available when compared to an Indian citizen. But I guess "nature balances itself out".
indushek
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In recent times i have been seeing lot of such remarks about India. I think that we have to take such remarks with a pinch of salt. The reason being that still a lot of people here are living below poverty line and the living conditions have to improve for many. The growth experienced is benifiting a few to say, however over the time this country has the potential to overcome these difficulties but this thing cannot happen overnight, there are many roadblocks like corruption, corrupt politicians and other demographic problems. We have to emulate the chinese in this because they never speak loud that we have developed so much though they have done really really well. We have to be very careful.
Nature does balance itself out...there was an article by someone who showed that the whole world's population could be contained in the state of Texas with the only limitation being that they have food and water for everyone. That is where arable land comes into play.If you compare China and India while China is a lot bigger geographically with just a slightly bigger population,India has a lot more land per capita which can be used to grow food and more water sources.Ergo more population can be fed.
http://www.nationmaster.com/graph/agr_ara_lan_hec_percap-arable-land-hectares-per-capita
The US has more land for her people..but this is the new world which has been populated for the last 400 years not the last 5000 as India or China.
Edit: All this is not to say that population should not be reduced.Other living things in the world also need place to live not just the humans.The best way other than darcorian methods is economic growth and education. India's 10-12 years of high economic growth in the South has made the population growth in the South around the replacement level. The population rise today is being almost solely driven by the 3 big north states(UP,Bihar and MP) all of which are India's poorest.
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