Two thousand years ago, Rome ruled the known world. Two hundred years ago, China and India contributed nearly half of the world's wealth. In 1913, Argentina was the 10th richest country in the world. Change is, as they say, the only constant.
Well, change is afoot once again, and it may be tough for Americans to accept. The country that put the first man on the moon, made the Soviet Union blink, and introduced the world to the glory that is the Colonel's secret recipe is going to lose its title as the world's superpower.
According to the National Intelligence Council (NIC), over the next 20 years, "The United States will remain the single most powerful country but will be less dominant" because "a global multipolar system is emerging with the rise of China, India, and others."
These political changes are fueled by the dramatic economic advances seen in emerging markets in recent years. As noted by the NIC, "In terms of size, speed, and directional flow, the global shift in relative wealth and economic power -- roughly West to East -- is without precedent in modern history."
As the economies in countries like China, India, Indonesia, and Brazil continue to develop, they will hold greater sway on global policy.
Making change work for you
Smart investors are positioning themselves to profit from the changes of the next several decades. Warren Buffett and Jim Rogers have both called this China's century. Mohamed El-Erian, former investment manager for Harvard's endowment and current co-CEO of PIMCO, suggests that investors hold two-thirds of their investments in assets outside the United States.
You'd be hard-pressed to find that much foreign exposure in most Americans' portfolios. Just a few years ago, most investment advisors felt that foreign stocks should make up around 20% of your portfolio at most. My, how things have changed.
While you were sleeping
While this shift may be news for most American investors, it isn't taking leading American companies by surprise. Nike
But it's not just consumer-goods companies that have found opportunity overseas. Caterpillar
Some companies have met with more success than others in their attempts to expand internationally, and most have had to adopt new strategies as they entered foreign markets. Wal-Mart
These major American companies are looking to emerging markets to drive growth because they have nearly reached their limits in the American market. Nike has been able to achieve 11% annual sales growth over the past five years only because foreign sales have grown 15%.
Now imagine an up-and-coming company based in China or Mexico or Chile -- or any other emerging economy -- that has direct access to the highly coveted growth in these markets and no mature (i.e., slow) market dragging down overall growth numbers -- a company like Sasol
They're also the types of companies our Motley Fool Global Gains team seeks out -- even travelling abroad to meet with management and get a first-hand feel for the companies they recommend to subscribers. To see all that Global Gains offers and to give your portfolio the best chance for success in the new economic world, try the newsletter risk free for 30 days. Just click here to get started -- there's no obligation to subscribe.
Nate Weisshaar wears his K-Swiss, but does not own any of the companies mentioned above. Wal-Mart is a Motley Fool Inside Value recommendation. Wal-Mart de Mexico, Saso, and America Movil are Global Gains recommendations. Sasol is also an Income Investor pick. Reading the Fool's disclosure policy is like reading Santa's wish list.