World Outperforms USA in Underperforming

For years, U.S. investors have been told to "go global" in search of stronger growth and higher returns. And Americans obliged by pouring billions of dollars into international stocks, mutual funds and exchange-traded funds.

But now the case for overseas investing appears to be unraveling.

Since global markets topped out late in 2007, the much-maligned U.S., the very source of the subprime mortgage meltdown that has racked credit markets worldwide, has dramatically outperformed some of last year's hottest markets.

The blue chip Dow Jones Industrial Average and the large-cap Standard & Poor's 500 both have lost much less than their major European and Asian counterparts of late, suggesting that the five- or six-year run in which foreign bourses routinely thrashed the S&P and the Dow has ended.

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"The international [outperformance] was a great story, but it's over," says Alec Young, S&P's international equity strategist, who notes that U.S. stocks now represent 41.3% of world stock market capitalization, up from 40% at the end of the year.

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International markets are down 20% across the board in local currencies, Young says, so the weak dollar doesn't even factor in. And over the past few months, S&P has been steadily reducing its recommended exposure to international stocks.

Despite big falls from their October all-time highs, the Dow and the S&P are among the world's best-performing major markets--Brazil, Mexico and Canada--all of which happen to be in the Western Hemisphere.

In fact, despite all the moaning and groaning on Wall Street and in the financial media, those big U.S. indexes have still not crossed the 20% decline that technically signals a bear market. And yet some of last year's biggest winners--Germany, India and especially China--are deep in bear market territory.

Despite a strong currency and a fairly robust economy, the German DAX index is down 21% from its high, in the same range as that of its querulous neighbor, France.

And in Asia, whose century we supposedly inhabit, it's been a bloodbath.

From India, which was just about to dethrone Silicon Valley as the world's low-cost high-tech capital, to China, the world's next economic superpower, to Japan, whose "lost decade" U.S. policymakers are now allegedly powerless to avert, investors have lost not only their shirts but also their shoes, their socks, their belts and their pants.

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These markets have racked up declines ranging from 28% in Mumbai to a sickening 38% in Shanghai, through March 19. Meanwhile, those of us who've been backward enough to stay in the "been there, done that" U.S. stock markets have taken relatively modest hits, with returns comparable to those of last year's global superstar, Brazil.

And that comes amid a financial crisis even former Federal Reserve chairman Alan Greenspan dubs "the most wrenching since the end of the Second World War." Housing prices have plummeted, consumer spending and employment have tumbled, oil prices topped $100 a barrel until March 19 and gasoline approaches $4 a gallon.

Either the equity markets are in complete denial, and U.S. markets will soon face a major crash, or maybe, just maybe, great U.S. companies that are not home builders or financials or purveyors of overpriced consumer junk are quietly selling excellent products and services around the world and are still making good money.

Despite everything, the U.S. economy is a giant with a lot of advantages that may be helping its markets now.

Meanwhile, the bloom is off the rose in China. Hong Kong's Hang Seng index fell 3.5% overnight, and the Shanghai Composite Index has fallen below 4,000 after topping out over 6,000 last October, when we recommended selling Chinese stocks. Inflation is rising, threatening to puncture China's growth bubble amid food and fuel shortages and an energy squeeze.

And as the Beijing Olympics approaches, a rebellion has broken out in Tibet and in neighboring provinces as Tibetans look for some autonomy and religious freedom. China's answer: Crush the dissenters and blame the Dalai Lama for everything.

These events may help crack the finely wrought veneer the government has crafted in its effort to make China shine in the eyes of the world. Ultimately it may remind investors that this is very much a dictatorship whose economy is still firmly controlled by the Communist Party.

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So, what lessons can we learn?

First, nothing lasts forever in investing--not tech stocks in the 1990s, housing in the early part of this decade or commodities now. International stocks, especially emerging markets, had a great run, but now, as Young says, may be their time to revert to the mean and lag ours for a while.

Second, despite its many naysayers, the U.S. isn't dead. Over the last couple of years, I've observed a certain schadenfreude--a joy in other people's trouble--in the downright glee with which some commentators have viewed the recent fall of the U.S. dollar and underperformance of U.S. stocks. But now investors may realize that the U.S. economy is much more resilient than others in times of crisis like this.

Third, every boom and bubble has its own rationale, but you should always put it in perspective. Nine out of $10 from U.S. fund investors went into international equities in 2006, and pundits such as Fidelity's Bruce Johnstone until recently advised investors to put as much as two-thirds of their equity into overseas stocks. I'd say 20% (no more than 5% in emerging markets) looks about right now.

Yet even that's a lot more international exposure than Americans had a decade ago. The truth is, the world is a smaller place and many economies and markets are becoming big new players on the world stage. Emerging markets especially will have much bigger ups and downs, but in the long run they should show bigger growth.

Medical Residency Programs in USA

"Nearly 13,000 graduates (84.6 percent) of allopathic medical schools in the U.S. landed one of their top three choices for a first-year residency slot, according to the National Resident Matching Program (NRMP)."

Out of "15,242 U.S. graduates, 14,359 won residency positions," and of these, the "first choice of residency went to 59.9 percent of U.S. graduates, second choice to 15.8 percent, third choice to 8.9 percent, and fourth choice to five percent."

NRMP data also indicated that there "were 30 [for a total of 2,636] more family medicine residencies available this year than in 2007, the first increase since 1998."

Overall, 10,341 students graduated from "international medical schools, nearly 3,000 them U.S. citizens."

But, "[f]ewer than half of the non-U.S. medical graduates were matched to a residency."

Milk Powder and Risk of Respiratory Problems

Study indicates exposure to milk powder may increase risk of respiratory problems.

The BBC (3/25) reports that according to a study published in the European Respiratory Journal, "[p]rolonged exposure to baby milk powder increases the risk of breathing problems, including wheezing and breathlessness." Maritta Jaakkola, of the University of Birmingham, U.K., and colleagues, examined about "170 workers in a Thai baby milk factory," which "had high hygiene standards, and concentrations of milk powder dust were relatively low." Most study subjects (130) "were directly involved in manufacturing and packaging baby milk," while 22 others "were responsible for adding vitamins to the milk, and 15 were quality controllers."

        The researchers found that "of the workers exposed to the milk powder, 24 percent reported wheezing, and 33 percent reported breathlessness, compared with 12 percent and 16 percent of 76 office workers from the same factory who served as controls," MedWire (3/25, Holmes) adds. Moreover, "the exposed workers were twice as likely to have suffered from asthma compared with controls, while workers responsible for adding vitamins complained of eye and skin symptoms twice as frequently as controls." The authors conclude, "It would be important to provide careful monitoring of respiratory symptoms and respiratory function tests for workers in milk powder factories, even where air quality checks are satisfactory."

Copper to Prevent Drug-resistant Infections in Hospitals

Copper may be used in hospitals to prevent spread of drug-resistant infections.

According to the New York-based Copper Development Association (CDA), "[c]opper doorknobs, bedrails, and faucets can prevent the spread of deadly drug-resistant infections that have become a growing...threat in hospitals."

In a statement, the group said that "[t]he U.S. Environmental Protection Agency has found copper, brass, and bronze can combat infections, including those caused by methicillin-resistant Staphylococcus aureus."

The CDA also noted that "Copper alloy surfaces can kill" approximately "99 percent of bacteria within two hours."

What sets USA apart ???

What sets USA apart ???

Even the most decent, charismatic or bold politicians tend to adhere to conventional wisdom and conventional prescriptions in addressing America's economic future. In doing so, they miss the point that it is the unconventional that has driven America's recent success, and the unconventional that must drive our future success.

A quarter of a century ago, most leading economists--whether liberal or conservative--predicted that American economic growth would fall behind Japan and Germany by 2007. They typically estimated that Japan's annual gross domestic product would be roughly $5 trillion by now, with Germany at around $4 trillion, and the U.S. lagging behind at roughly $3.5 trillion.

The predictions for Japan and Germany were reasonably accurate. But America grew to $13 trillion.

How did the U.S. nearly quadruple the estimates of the world's best economists? One key is that these economists had based their guesses on a nation's quantity of natural resources, not on the quality of its intellectual capital or its ability to put that intellectual capital to use.

America's surprising economic growth has been traced back to some 1,000 key innovators, entrepreneurs, rainmakers, mentors and creative geniuses--some 60% of whom were foreign-born persons who were educated at American universities.

This meant that the U.S. had a unique edge in terms of the talent and the environment that was necessary for growth. The revolutions of technology--in electronics, in space technology and satellite communications, in personal computing, in the Internet and in information technology--were all American revolutions. The U.S. innovated while others imitated.

America's outrageous success in the past quarter-century, owing to the 1,000 unconventional superstars and rainmakers and the tens of thousands of stars who surrounded them, was mainly serendipitous. But a repeat of this success will require forward-thinking strategy and investment, in the face of an emerging Asia, a resurgent Europe and stiffer competition around the globe.

We would recommend a few cornerstone strategies, which would preserve and enhance the environment in which America can cultivate its next generation of stars of unconvention.

First, we must set our faces toward the medical and biological science frontiers, as those are the likely settings for the planet's next technological and humanistic revolutions.

The federal government also must strengthen its support for the American research enterprise--which since World War II has been carried out chiefly at some 50 leading U.S. research universities. Those universities produce some 80% of our Ph.D.s, and these Ph.D.s are the manpower and womanpower for this country's work in basic science.

Basic science and technology is the creator and destroyer of global industries and eras. Its discoveries can lead to marketplace innovations that create vast new economic sectors, businesses, jobs and products to drive the global economy. The Internet is the most recent example. Nanoscience may be the next one.

Yet given recent actions by Congress to skimp on research funding for university-based research for the Department of Defense, such a level of commitment no longer exists. Industry, given its constraints and pressures, is not in a position to perform science research on its own. America's best bet is for government, research universities and industry to work together in generating new discoveries and facilitating their way to the marketplace.

Our younger citizens must be prepared for a lifelong process of learning and unlearning. We must not merely train them in conventional skills--we must equip them to develop for themselves the sets of skills that would be appropriate for unexpected professional and technological developments. This requires every citizen to be as fluent in timeless arts and humanities as in timely technologies.

Finally, given that three in five of America's 1,000 key superstars and rainmakers were born in other nations, we must incentivize the continued migration of the world's best minds to America. Here we face escalating competition from Australia, England and other countries for "brain gain," the new Holy Grail of global leadership.

Just as yesterday's conventional wisdom held that Japan and Germany would pass us by, today's conventional wisdom holds that other nations soon will exceed us in skills and productivity. Yet by maintaining our edge in the unconventional things--especially in our ability to innovate while others continue to imitate--America will remain the pacesetter in this still-young century.

How to Take Care of Your Boss

How to Take Care of Your Boss...

When "Managing Your Boss" was first published in 1980 in the Harvard Business Review, it was a relatively unknown concept. Until then, most companies operated top down--the boss told you what to do, and you did it.

John J. Gabarro and John P. Kotter's article turned that concept upside down. Instead of waiting for the boss to make decisions, employees should understand the types of constraints and pressures their bosses are under, so they can better work together. It was particularly important as technology and globalization spurred the evolution of business.

Fast forward to modern times. Those issues are more prominent than ever. Perhaps that's why "Managing Your Boss" is one of the most popular Harvard Business Review articles of all time. It's in the top 20 of cumulative sales since publication and was recently repackaged into a small book.

Gabarro reflected on why almost 30 years later "Managing Your Boss" is still relevant and offered tips on how today's employees should accomplish it.

Forbes.com: What do you mean when you say managing your boss? Do you mean communicating with him or her?

John J. Gabarro: Communicating but also, understanding the world your boss operates in. Find out what the constraints and pressures are that she experiences. Get some sense of who her boss is. Also, what are her idiosyncratic needs are as a person. What are her strengths and weaknesses and try to mold your style.

Isn't that just not being selfish?

To some degree, yes. Every relationship is a two-way deal. This one has asymmetric power. But the boss is dependent on you. If you don't come through, the boss is in trouble. Most relationships are more effective if you understand the other person. If you do, it's easier to work out a set of expectations.

How do you go about understanding your boss?

Most people figure that out. They observe from the boss that he or she is fabulously creative, quick and decisive but is a bloody disaster when it comes to organization. You may have the opposite problem--a boss who isn't decisive and it's very hard to get a decision out of him or her.

Either way, anticipate the weaknesses and try to do something so the weaknesses don't cause you a problem. If your boss is always late in getting you the material needed to do your job, start asking for what you need from him or her earlier so you're not in the lurch. If you have the resources, you can help the boss get stuff together.

Let's say you're a consultant, and you have a deal that is eminent, but Christmas is coming up. A pile of the work can be done beforehand. Your supervisor is also working on two other transactions. Go up to the partner and say: "There are all kinds of due diligence that can be done before the holiday. Why don't we do it now so we don't have to have a team working over Christmas?"

Another proactive step is, after a month or six weeks on the job, have a conversation with your boss about goals. You might say, "I'm learning the basics of the job. It would be helpful for me to have a good idea of your goals and priorities." Bosses welcome that. A very useful question for all employees to ask their boss is, "What are your major priorities? What are the hot issues now that the department is facing? In what ways can I and the rest of the team help on that?"

This is a very modern topic because of globalization and all employees having to do more with less. But you and John Kotter wrote this article about 28 years ago. Why do you think it's still relevant?

The world has changed in a lot of ways. The good news is, managers are more sophisticated and around these issues. The bad news is the pace of business in general has really accelerated. That's driven by much better competitiveness and by technology. Work occupies more and more of our time. People are working harder today than 27 years ago. It's a much more competitive world, and most of us are on 24/7. It's a cliché, but it's true.

That's changed the nature of pressure on your boss. If you telecommute, you're working more often. There's less of a relationship and more work. The number of subordinates the average boss has is a lot larger now. You get a smaller piece of your boss. That means you have to manage him or her even more. Bosses are simply a lot more overloaded.

Education, Life Expectancy and Smoking

"Increases in life expectancy in recent decades have been concentrated almost entirely among better-educated Americans," according to a study published in Health Affairs.

The researchers found that smoking is one of the main contributing factors, because only seven percent of Americans with graduate degrees smoke.

That figure is 35 percent among American who did not graduate from high school.