The Pin Code of the World

110
  • A poisoning in Mozambique
  • This idea is dead…but the world doesn’t know it
  • Plus, where the global market is moving to…

Today’s Profit Watch leaves the immediate news behind to celebrate a basic fact: The world is getting much better every day.

That’s the only possible conclusion you can come away with if you happen to read the book called Factfulness.

A Swedish doctor, Hans Rosling, wrote it with his son and daughter-in-law.

Herr Rosling spent a lifetime trying to help those living on what he calls ‘Level 1’.

You and I know it as extreme poverty.

How strange that this man ended up advising pension funds and major US corporations.

What could he tell them?

Why, the pin code of the world, of course.

Do you want to know the number and its significance?

Read on to find out…

Some background is important here.

Hans Rosling was working in the African country of Mozambique over 40 years ago.

He was investigating a mysterious illness that was infecting people in a remote village.  

The symptoms including paralysis of the legs and blindness. It didn’t seem to fit the profile of any known disease.

Rosling worried it was possibly infectious. He decided to evacuate his wife and child back to Europe. But perhaps it was too late for him?

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The answer — incredibly — lay in the local agriculture.

In Mozambique, the diet was based on something called the cassava. It’s a starchy, tuberous root.

The catch is that it needs to be processed for three days before it becomes edible.

At the time, the Mozambique government was buying every available processed cassava root from the local farmers. They were trading at record prices due to a food shortage. 

Naturally, the farmers sold every scrap they had. They left nothing — literally — for themselves to eat.

They became so hungry they were eating unprocessed cassava roots straight from the field.

It was the equivalent of ingesting cyanide.

This experience turned Hans Rosling from a doctor into a researcher…and an expert on ‘developing’ nations.

It’s why he knows the pin code of the world…and the investment implications.

From the North Atlantic to the Indian Ocean

Hans Rosling hated dividing the world into ‘developed’ and ‘developing’ nations. He felt it gave an inaccurate picture of how the world had changed since 1965.

85% of the world is in developed countries, if you count the right metrics: Lower birth rates, higher childhood survival, access to electricity, basic healthcare and the education of women.

His point is that the idea of the rich West and everywhere else is over. We’re better served if we divide incomes into four different levels. Level 1 is extreme poverty. Level 4 is the safe and comfortable life of Australia.

It’s Levels 2 and 3 where most of the world population spend their days.

Around 75% of the global population lies in middle-income countries. This is the largest expansion of this consumer market in history.

It’s happening in Asia and Africa. The brands that establish a foothold in these markets will make a fortune.

Hans Rosling began telling corporates and fund managers to position themselves to capture this uplift.

This is where the world market is going to shift over the next 20 years — from the North Atlantic to the Indian Ocean.

That brings us to the pin code of the world.

It’s 1-1-1-4.

The numbers refer to how many people live in each major area of the globe — in billions.

There’s a billion in the Americas. A billion in Europe. And a billion in Africa.

There’s four billion in Asia.

And the numbers show one thing…

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The UN estimates that by the end of the century, there will be three billion more people in Asia and another billion in Africa.

Europe and the Americas will remain roughly the same.

On current income trends, just 50% of Level 4 consumers — that’s you and I — will be in the West within eight years.

It’s a very handy number to remember when you hear arguments like ‘secular stagnation’ bandied about. Or the latest news about low growth in Europe.

It blocks your view of the major opportunity over the next decade: The rising middle class of Asia and a rising Africa.

Companies that have some edge or access to this make for great long-term investments.

Now, we can never know what the next year — or even the next quarter — will bring. China may indeed be slowing down considerably. India’s stock market seems to have topped out for the moment. 

But that doesn’t mean opportunities around these markets disappear completely.

Just this week, one of my recommended stocks announced a major deal around Indian music. Consider the size of the potential market. It’s astonishing.

The deflationary march of technology brings even more people into the global market all the time through smartphones and the internet.

The daily news feeds us nothing but short-term worries most of the time.

Pick up a copy of Factfulness. You’ll see why now is the most exciting time ever to be alive — and great for investors, too.

Cheers,

Callum Newman Signature

Callum Newman,
Editor, Profit Watch

PS: By the way, if you’d like to know how to profit from the rising middle class of the world, my latest report lays out how. Don’t hang about — the recommended stock is up 25% in the last four weeks. I’ve been saying to buy the dip. It’s just under my buy-up-to price — for now.

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