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2012 Investment Themes

January 10, 2012

As my good friend Gary Shilling says, in leading off his piece on 2012 investment themes, which is this week's OTB, "This year is just the first step in the long-run journey that will continue to be dominated by The Age of Deleveraging" – which also just happens to be the title of Gary's latest book. Whether you call it that or call it the End Game, as I have, it shapes up as a profoundly different and challenging era for all of us. Gary identifies 9 causes of slow global growth in the years ahead:

1. U.S. consumers will shift from a 25-year borrowing-and-spending binge to a saving spree. This will spread abroad as American consumers curtail the imports of the goods and services many foreign nations depend on for economic growth.

2. Financial deleveraging will reverse the trend that financed much global growth in recent years.

3. Increased government regulation and involvement in major economies will stifle innovation and reduce efficiency.

4. Low commodity prices will limit spending by commodity-producing lands.

5. Developed countries are moving toward fiscal restraint.

6. Rising protectionism will sloweven eliminateglobal growth.

7. The housing market will be weak due to excess inventories and loss of investment appeal.

8. Deflation will curtail spending as buyers anticipate lower prices.

9. State and local governments will contract.

Gary has always been prescient in looking ahead – witness his call nearly a year ahead of the Great Housing Debacle that commenced in '07 – but you don't just want to know what's coming, you want to know what to do about it; and that's exactly what Gary is going to run down for you, sector by sector and asset by asset, in the following pages.

I note that this piece is just an excerpt from the January issue of Gary's INSIGHT newsletter. OTB readers can get the entire 48-page tour de force, and a full year's subscription, plus the Jan. 2013 issue as a bonus, for $275 via email, by calling them at 888-346-7444 or 973-467-0070. Be sure to mention Outside the Box to get the special rate and free issue.

Now let's check out Gary's investing themes for the coming year.

Your antsy about 2012 analyst,