THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: SATURDAY, June 11, 1994 TAG: 9406110365
SECTION: BUSINESS PAGE: I2 EDITION: FINAL
SOURCE: By GAGE HARTER, STAFF WRITER
DATELINE: 940611 LENGTH: Medium
Dodge, Dean Witter's chief investment strategist, told a capacity audience at the Holiday Inn Executive Center in Virginia Beach Thursday night that the world is getting back to basics. This means there will be a high demand for hardware, lumber and machines as developing countries strive to raise their standard of living.
{REST} ``Never before in the history of mankind are so many people embracing the political and economical principles that America stands for,'' Dodge said.
Dodge explained that during the Cold War, America invested in countries such as Germany and Japan to prove its capitalistic system was superior than the former Soviet Union's.
But as America allowed other countries to produce the world's goods, its manufacturing and industrial base eroded as military buildup became a priority. This shift increased the number of global businesses and jobs.
When the Cold War ended, many countries moved from dictatorships to social democracies. Or as Dodge put it, ``they like to do it our way.''
Developing countries' desire for a higher living standard has triggered a race by other nations to produce for them consumer items such as apparel, durable goods and automobiles. Many of these developing countries are looking to America for exports because labor costs here are significantly lower than Japan's or Germany's.
Dodge explained that the '70s was a time for physical assets while during the '80s, brokers encouraged financial assets. Now, however, Dodge stressed, is a time for productive assets, such as agricultural goods and manufacturing goods..
For example, instead of a foreign farmer using an ox and a plow, he will want to buy a John Deere tractor, one that will probably be assembled in his country but made with American parts.
``Think glocally,'' which, Dodge said means ``Think globally and invest locally.''
As far as inflation goes, Dodge said it appears the Federal Reserve will slow economic expansion to keep inflation rates down. He compared the current rate of growth to '83-84 when the Fed lowered inflation.
``Low inflation causes global supply of everything to go up,'' he added.
And what does Dodge think about a national health-care program?
He proudly told the audience that in '93 he predicted there wouldn't be reform legislation in place in '94. He said there are still too many unanswered questions. But he predicts that there might be some modest form of health care reform in place this time next year.
When it comes to personal investment, Dodge subscribes to the 100-years rule. He suggests that investors subtract their age from 100 and invest the difference in stocks and the rest in bonds.
One audience member said that Dodge was a true salesman and a lot of what he said, ``was too sophisticated to 95 percent of the people.''
But Dr. Calvin Nestor added, ``I think the thing he stressed most was: concentrate in investing in the United States. Have faith in the industrial might of America.''
by CNB