Keith Fitz-Gerald

Be Selectively Bullish During the Financial Crisis

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* Because it's a developed market, the United States remains the world's safest and most promising place to profit: In the 1980s, the United States accounted for one-third of the global economy; by 2030, that ratio will be cut in half. The reality is that U.S. investors who want to be successful in the years to come will have to learn all they can about markets whose names they can't yet pronounce.

Wall Street may not agree, but the real adage to embrace and remember is this one: It's easier to become No. 1 than it is to stay there.

There's no doubt that the "experts" who are projecting that the world markets will decline further and perhaps even collapse will take issue with my analysis. But it's important to note that I agree with you -- at least in the near-term. Barring a governmentally induced Hail Mary, I think there's no question that the worst remains ahead of us.

But longer term -- I'm talking three, five to 10 years -- I am intrigued by the fact that so many emerging markets have collapsed in the chaos, even though the underlying economies haven't really changed.

Everything we know about financial markets history and changes in market behavior suggests that countries backed by high cash reserves tend to emerge from periods of market chaos faster -- and stronger -- than the economies that had been at the top of the heap when the crisis first struck. (For some insight into which countries have the biggest reserves as a percentage of GDP, take a close look at the chart below).

Where does that leave us? Well, in spite of what Wall Street would have us believe about the Red Dragon, this cash-reserves indicator suggests that China -- and countries that have close economic ties with that country -- may actually be getting more attractively valued (and not less) by the minute. That's especially true for longer-term investors.