John Mauldin’s Out­side the Box report this morn­ing high­lights Gary Shilling’s take on 2012. Shilling believes the global econ­omy will be dom­i­nated by an era of delever­ag­ing and sees the fol­low­ing causes slow­ing down growth over 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 slow – even elim­i­nate – global 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.

As far as his invest­ment themes for 2012 are con­cerned, Shillings lists the “attrac­tive” and “unat­trac­tive” items below.

Attrac­tive:

• Trea­sury bonds
• Selected income-producing securities
• Small lux­u­ries
• Con­sumer sta­ples and foods
• The U.S. dol­lar, against the euro and com­mod­ity currencies
• Selected health­care providers and med­ical office buildings
• Rental apart­ments
• Pro­duc­tiv­ity enhancers
• North Amer­i­can energy pro­duc­ers, ex renewables

Unat­trac­tive:

• Devel­oped coun­try stocks
• Home­builders and related companies
• If you plan to sell your home, sec­ond home or invest­ment houses any time soon, do so yesterday
• Selected big-ticket con­sumer dis­cre­tionary equities
• Con­sumer lenders
• Banks
• Junk secu­ri­ties
• Devel­op­ing coun­try bonds
• Devel­op­ing coun­try stocks
• Selected com­modi­ties
• Many old tech cap­i­tal equip­ment producers

Source: John Mauldin’s Out­side the Box (via Investors Insight), Jan­u­ary 9, 2012.

Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.

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