The day was January 6, 1999. President Bill Clinton had just been impeached by the House of Representatives, John Elway and the Denver Broncos were cruising through the AFC playoffs en route to their second consecutive Super Bowl victory, and Apple's (AAPL) then interim CEO Steve Jobs was wowing MacWorld with iMacs that came in five colors. It was also the first time the S&P 500 crossed and closed above 1,25o.
Investors were not only on the cusp of the tech bubble (and burst) but were embarking on what would ultimately become a lost decade for stocks. Lost, that is, unless you had the foresight to buy and hold in the emerging markets (EEM). If so, you'd be up somewhere in the neighborhood of 350 percent today, instead of starting all over again from scratch.
And it is for this very reason that Cabot Money Management's President & CIO Rob Lutts has hitched his wagon to the developing world once again. It's one of the three bull markets that he says is still under way, and investors should gain exposure to (if you haven't already).
"Wealth and power are moving from West to East," Lutts says, adding that this is one of the rare times that you can get better growth rates and better valuations from emerging markets. "Investors need exposure there [China, Brazil, India]," Lutts says, and the recent pullback offers an opportunity to get on board. Emerging markets "belong in everybody's portfolio."
Perhaps you already have exposure there or are not ready to shop abroad yet. If that's the case, Lutts lays out a domestic plan of attack focused on the explosive growth of technology and data. Again, this is not a new idea but rather a long-term trend that Lutts believes is still intact, and most investors should be involved in. He concedes to having some apprehension about investing at current levels but calls names like Salesforce.com (CRM) ''an ideal way to play" the trend. It's a stock he has owned for four years.
Another is Netflix (NFLX), which he calls a visionary leader that will "own the living room" in terms of innovating to change entertainment. Additionally, he likes Apple (AAPL), saying the valuations are modest and that he thinks the company can maintain its growth.
The third long-term bull market to play is the metals space. Lutts isn't catching the silver bug of late, but favors gold, nickel and platinum. With gold, he acknowledges that big players like John Paulson and George Soros have already been moving in and out of the space and there's been strong flow into the (GLD). But in his view, this precious metal is poised for new highs because large institutional money -- like Calpers, Yale and Harvard endowments -- has been largely absent. But this is about to change, and when it does, it's a whole new phase of the bull market in gold. ''Denial, acceptance and broad support by big institutions" will push gold into the $3,000 to $5,000 range. As such, he now puts 10 percent of his high net worth clients into it.
Of course he stresses that all of these are long-term picks, but given the current climate of uncertainty, it might just be time to think outside the box.
Have some thoughts on our chat with Rob and his ideas? Please post your comments below, on Twitter @MattNesto or @JeffMacke or via email to Breakoutcrew@Yahoo.com.
　
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