Kaminsky's Call: The Next Growth Story
Morgan Stanley, Vice Chairman
While on safari with my family over the holidays, I was reminded of the classic 80s band Toto and its hit song, "Africa." Remember the chorus to that tune—"I bless the rains down in Africa"?
Well, those rains need all the blessings they can get. Because what I learned on safari is that soft commodities—you know, crops—are the key to what could be the next great secular growth story.
On Wall Street, secular growth stories are the investment equivalent of Haley's Coment; they come around once in a generation, and before you have a chance to really appreciate them, they're gone. These are the stocks that can grow despite the ebbs and flows in the economy. Think Biotech stocks in the early part of this decade. Think Tech in the early 90s.
So what did I see that got me so excited? Food, or more accurately, a changing diet in sub-Saharan Africa.
Everyone rightly talks about how cars and i-products will be the staples of the growing middle class in Africa and other parts of the emerging world. But as my time on the ground there indicated to me, the story is much bigger.
When people acquire wealth, they develop an appetite for more than just VWs and smart phones. They develop a taste for a richer diet, and that's exactly what I saw happening all throughout my trip through Africa. Protein, either through direct consumption of nuts, meat, corn products and other soy based delicacies, was in hot demand. And as these societies progress, so too should this trend.
I was not alone in my observation. My traveling companions, prominent, sophisticated investors, also noticed that we were witnessing a mightily secular change.
Of course, noticing a trend and profiting off a pattern are not one and the same. Fortunately, my friend identified a way to do this that: buy DB Agriculture Double Long.
It's a leveraged ETF that looks to track the performance of the Deutche Bank Liquid Commodity Index. In other words, it tracks the price of soft commodities, which have been on fire as this story just begins to take hold.
The ETF recently touched a 52-week high, and while that might give some investors pause, I do believe this in one way to participate in what is setting up to be an incredible growth story.
Remember the wise words of Toto: "Hurry, boy—it's waiting there for you."
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Gary Kaminsky does not hold any equity positions.
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