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Emerging Markets- The Final Frontier

As we approach an unprecedented weekend, the grim reality of a global recession has investors once again placing their hopes in coordinated central bank intervention. Meanwhile, businesses and investors alike eye reluctant emerging market consumers as their best hope for earnings growth. Identifying willing customers outside of conventional markets will separate those who weather this storm from those who falter in a harsh global economic climate. In this letter, I will identify yet-to-emerge markets that are ready to fill the void in demand, but bold action must be taken.

A brief discussion of Social Cognitive Theory will help illustrate my point. Social Cognitive Theory credits our ability model behaviors with the advancement, and perhaps, survival, of the human race. Put more simply; humans are capable of learning by means other than trial and error on an individual basis. This trait is not unique to our species. In fact, all social species in nature, from birds, to apes, to dolphins demonstrate this attribute as fundamental to their survival. Interestingly, humans are the only known species to exploit this tendency for selfish gain. In a perverse twist of fate, humans have invented marketing, political science, and even game theory to exploit our genetic "collective survival" programming.

Social Cognitive Theory explains how humans were able to advance from mostly nomadic gatherers to middle-management dingleberries in less than 2.6 million years. It also explains how we are genetically programmed to be gullible consumerists. For such a sophisticated grasp of Social Cognitive Theory as it applies to our species, we fail to realize its effects on others.

Recent studies have demonstrated various social animal species as "smarter than we previously thought". Apes, dolphins, and even birds have demonstrated behaviors previously thought exclusively human, such as the use of tools to obtain food, creativity, the ability to pass learned information on to their young and long-term memory of newly learned information. I contend that the non-human species recently observed using tools have not been doing so in secret for 2.6 million years. Instead, as Social Cognitive Theory would predict, these behaviors are indeed new. They were most likely learned through observation. Even, perhaps, through observing humans. Regardless of how they arrived as a species, they have entered their respective "Pre-Paleolithic" (Pre-Stone Age) eras. If that does not scream "emerging market" to you, you might as well quit investing now and take up cribbage.

While it did take roughly 2.6 million years for humans to evolve from the "Pre-Paleolithic" Era to worthwhile consumers, we did so as a species without assistance, and with numerous inter-species conflict oriented detours. Coaching other social species already on the cusp of their respective Stone Ages up through the Modern Era could take as little as 15 years! Not a moment too soon for blue chips hard pressed to find willing consumers!

The cost of accelerated Era advancement for non-human social species is as necessary now as investment in the internet infrastructure was in the 1980s. The economic impact of opening the doors to the avian, ape, and marine mammal consumer would dwarf that of the industrial revolution. Putting half of the worlds raven population into fuel efficient automobiles would spur US GDP alone by an estimated 2%. Corporations willing to invest in technologies targeted at markets ignorant to the concept of "caveat emptor" stand to gain mightily until competition realizes the missed opportunity and scrambles to catch up.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.