“You can globalize your portfolio through investing in select countries, select international regions, or by choosing domestic large caps with growing multinational markets.”

The domestic economic boom that began in 1982 and will last until around late 2008 or early 2009 has made the U.S. the best investment market in the world. Yet other countries also offer good choices for the smart investor; right now and especially in a few years, when the U.S. market will transition to a Deflationary Shakeout or depression era. In fact, after 2008 investing in select international markets will be one of the few opportunities for continued equity growth.

Your choices for international investing include:

• Investing in developed countries
• Investing in emerging countries
• Investing in multinational stocks and regional funds

I evaluate developed and emerging nations differently in order to select the best countries and regions for investment. While my demographic models work very well in developed countries that are more like the U.S., they aren’t as applicable to emerging countries. There, during their economic incubation period, political stability and development policies play a bigger role than predictable patterns of consumer spending.

The Spending Wave works well in predicting general economic trends in developed countries. However, most have a smaller internal marketplace than the U.S. and in consequence, their economic health depends on domestic demographics as well as their ability to develop, support and protect specialized export industries. A classic example of this is Japan. Nevertheless, I used demographics to predict the dramatic collapse of the Japanese economy in the late 80’s and at a time when everyone else was extolling Japan’s continued success.

In emerging countries, demographics are not the most critical indicator. These economies lack a sufficiently large middle class to follow the predictable spending cycles we find in developed countries. Instead, we consider industrialization, the skill of the labor force, the level of investment in industrial, transportation and communications infrastructure, and the political and social climate’s effect on trade, innovation and development. This is a lot to factor in, but we have an advantage in analyzing emerging nations. Most will follow predictable stages of development on their way to a stable free-market economy.

For example, the first phase of industrialization typically gives rise to a standardized economy in which the large companies that can produce mass market goods and services will prevail. It also produces a rising urban middle class that can increasingly afford to buy such goods and services. The U.S. developed its standardized economy between about 1865 and 1970, at which point it began transitioning to a customized economy. Many emerging countries are moving into this stage, yet we are seeing that industrialization is happening considerably faster for them. Not only do they benefit from the management skills, expertise, technologies and investment capital contributed by developed countries, they also feel the impact of the globalization of the economy ; for better and for worse.

Because opportunities to build wealth through international investing exist now and will become critical after 2008, I have adopted a global perspective in my research. This includes evaluating the markets in developed countries, in emerging countries, and seeking opportunities to globalize your portfolio through multinational equities and funds.