ETFs: Implications of Goldman Sachs Predictions

by: Tom Lydon posted on: August 01, 2008 | about stocks: ADRD / EWZ / GAF / GXC / ISI / VEU    
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Goldman Sachs’ economic team recently pulled out their crystal ball to come up with a new world order for the year 2040, and the prognostications could affect ETFs in years to come.

Take heed: This team was the originator of the BRIC concept (Brazil, Russia, China and India), and stated that they were developing countries that were expected to catch up and overcome the bigger economies of the developed world. The BRICs wound up becoming among the top performing countries for 2007.

Now, Goldman has put together its list of the “Next 11″ that includes middle-sized economies such as Turkey, Indonesia and Mexico, which are expected to grow fast enough to overcome the older and richer counterparts in the next wave, reports Gwynne Dyer for Scotsman News.

In 2006, Goldman predicted that the Chinese economy would surpass that of the United States’ in 2040, with the Indian economy trailing. But now China has been fast-tracked to 2025, while India’s economy is predicted to be slightly smaller than that of the United States’ by 2050. The economies of Brazil, Russia, Indonesia and Mexico will be bigger than that of Britain’s, they say.

It’s strange to think that back in 1968, few economic analysts would have predicted any of this, any more than they foresaw globalization, the internet or the rise of the euro.

ETFs that might be affected if Goldman’s forecasts are on the money:

  • iShares S&P 1500 Index Fund (ISI), down 12.1% year-to-date
  • Vanguard All World ex-US (VEU), down 13% year-to-date
  • BLDRs Developed Market 100 ADR Index Fund (ADRD), down 14.6% year-to-date
  • SPDR Emerging Middle East & Africa Fund (GAF), down 8.1% year-to-date
  • iShares MSCI Brazil (EWZ), down 2% year-to-date
  • SPDR S&P China (GXC), down 22.5% year-to-date

This article has 8 comments! Add yours below...
Tom Lydon

Tom Lydon

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This article has 8 comments:

  •  
    jimstam
    Aug 01 10:50 PM
    My Website
    A new acronym for some of these countries, following the success of BRICs could be "PIVOT".. "Philippines - Indonesia - Vietnam - Oil OPEC countries - Turkey".
  •  
    good time
    charlie
    Aug 02 09:12 AM
    Didn't Goldman and this jerk just go bankrupt? Short term memory must be gone.
  •  
    John Egan
    Aug 02 02:37 PM
    I really like the 'PIVOT' acronym... Email it to Cramer... Seriously, he'll probably start using it.. jegan ;-)
  •  
    Philly Jim
    Aug 02 05:19 PM
    Goldman analysts all have PhD's in Pumping and Dumping. They are academics caught-up in the whirlwind of a tremendous surprise in expectations from these disorganized and often corrupt 3rd world nations and their ability to produce and export as much as they are/have. The same psychology that pumped and dumped the Internet and caused the housing bubble is the same psychology driving the FDI into these DC3 (disorganized & corrupt 3rd world) nations.
  •  
    johnthebear
    Aug 02 06:36 PM
    Agree totally with the comments, not the author, Mr. Tom Lydon.

    Pump and Dump was the name of the game in the 2000 crash. Goldman and Abby Cohn were a lot to blame for that and they are doing the same again with the BRIC group. That is all they could say in 1999, 'stocks are going higher, because they have been going higher'.

    The author should look at the 200 day moving average of all these countries and factor in a global recession before jumping on the bandwagon. A reality check is in order.

    "Goldman Sachs’ economic team recently pulled out their crystal ball to come up with a new world order for the year 2040"

    Just because all of the stocks he mentined have gone down a lot does not mean they can't go down much lower!

    Goldman and the author will be right one day, but in my judgment, the long climb back up the mountain will start from way down deep in the valley, after lingering near the graves of failed companies for several years.
  •  
    gksmar
    Aug 03 12:31 AM
    To catch up with the US economy by any of the bric nation is a dream. There are lot more factors that contribute to the nation's economic development, like corruption, poverty, political stability, law enforcement, ease of doing business, clamping to terrorism, etc. The list goes on.
    Goldman may have Phd dudes in economic, so did those guys who came up with CDOs and exotic derivatives and lost billions of dollars.
  •  
    buyitcheap
    Aug 05 07:35 AM
    Why not just by a global/ Total stock fund ex-US and not worry about it? Vanguard has one, any suggestions as to similar funds/ETFs most welcome and requested...
  •  
    oneslip
    Aug 15 08:58 AM
    I agree that the world is developing but I still don't think America and Europe will not have periods of expansion. A lot of the emerging economies will experience thier growing pains of booms and busts and if you do not have an industry you are done.
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