Why Global Diversification Matters By Anthony Davidow Ap.docx

Why Global Diversification Matters
By Anthony Davidow
April 02, 2018
Over the past few years, some investors have begun to question
the merits of global asset
allocation. They wonder whether the risks abroad justify
investing money outside the United
States—and whether there truly are diversification benefits to
doing so. Some have even
challenged Modern Portfolio Theory itself, which emphasizes
the long-term benefits of a
diversified portfolio.
In some ways it’s natural. It’s an unpredictable world, and
investors worry about market
volatility both at home and abroad. Everything from political
questions in the wake of the U.K.’s
“Brexit” vote in the summer of 2016 to the recent U.S. elections
to anticipation of the Federal
Reserve raising rates have indeed contributed to market swings.
Moreover, in investing—as in sports and other areas of life—
people often exhibit familiarity bias
(“home-country bias” in this case). We’re inclined to believe in
and root for the things that we
know best. While this may be human nature, home-country bias
limits an investor’s universe of
available opportunities. Worse, it may not be prudent given the
nature of today’s global markets:
According to MSCI data, roughly half of all global companies
are based outside the United

States, which corresponds to global gross domestic product
(GDP) ratios.
Do you really want to limit your investment opportunities by
half? How can you overcome
home-country bias?
As the saying goes…
Times like these show why the adage “don’t put all your eggs in
one basket” is so vital for
investors. An investment sector that performs well one month or
year might be a poor performer
the next. For example, as the chart below shows, emerging
market stocks were the worst
performer in 2008—only to rebound back to the top in 2009 and
also 2017. More recently,
international developed stocks were among the top performers
in 2017, after placing near the
bottom in 2016.
Over the long run, there’s no discernible pattern to the rotation
among the top performers, so it
doesn’t make much sense to concentrate all your investments in
a particular region or asset class.
A globally diversified portfolio—one that puts its eggs in many
baskets, so to speak—tends to be
better positioned to weather large year-over-year market
gyrations and provide a more stable set
of returns over time.
How key asset classes compare to a diversified portfolio

Source: Morningstar Direct and the Schwab Center for Financial
Research. Data is from January 1, 2008, to December 31, 2017.
Asset class
performance represented by annual total returns for the
following indexes: S&P 500® Index (U.S. Lg Cap), Russell
2000® Index (U.S. Sm Cap),
MSCI EAFE® net of taxes (Int’l Dev), MSCI Emerging Markets
IndexSM (EM), S&P United States REIT Index and S&P Global
Ex-U.S. REIT
Index (REITs), S&P GSCI® (Commodities), Bloomberg
Barclays U.S. Treasury Inflation-Protection Securities (TIPS)
Index, Bloomberg
Barclays U.S. Aggregate Bond Index (Core Bonds), Bloomberg
Barclays U.S. VLI High Yield TR Index (High Yld Bonds),
Bloomberg Barclays
Global Aggregate Ex-USD TR Index (Int’l Dev Bonds),
Bloomberg Barclays Emerging Markets USD Bond TR Index
(EM Bonds), Bloomberg
Barclays Short Treasury 1–3 Month Index (T-Bills).
The diversified portfolio is a hypothetical portfolio consisting
of 18% S&P 500, 10% Russell 2000, 3% S&P U.S. REIT, 12%
MSCI EAFE, 8%,
MSCI EAFE Small Cap, 8% MSCI EM, 2% S&P Global Ex-U.S.
REIT, 1% Bloomberg Barclays U.S. Treasury, 1% Bloomberg
Barclays
Agency, 6% Bloomberg Barclays Securitized, 2% Bloomberg
Barclays U.S. Credit, 4% Bloomberg Barclays Global Agg Ex-
USD, 9%
Bloomberg Barclays VLI High Yield, 6% Bloomberg Barclays
EM, 2% S&P GCSI Precious Metals, 1% S&P GSCI Energy, 1%
S&P GSCI
Industrial Metals, 1% S&P GSCI Agricultural, 5% Bloomberg
Barclays U.S. Treasury 3¬–7 Yr. Including fees and expenses in
the diversified
portfolio would lower returns. The portfolio is rebalanced

annually. Returns include reinvestment of dividends, interest
and capital gains. Indexes
are unmanaged, do not incur fees or expenses, and cannot be
invested in directly. Past performance is no indication of future
results
Diversification strategies do not ensure a profit and do not
protect against losses in declining markets.
Why consider a global allocation?
The short answer is that it’s almost impossible to avoid
international exposure in today’s globally
interlinked economy. Nearly half the revenues of the U.S.
companies in the Standard & Poor’s
500® Index come from overseas. And more than half the
world’s market capitalization now lies
outside the United States.
Some might say that argues against global diversification, that
everything is so interconnected,
overseas investments might simply overlap domestic ones. But
that’s not the case: Companies
tend to act in ways that reflect their “country of domicile.”
They tend to respond to local
economic and geo-political events more than events outside
their borders. And different
countries’ economies often tilt toward different market sectors
or industries.
In addition, certain circumstances—call them “new market
realities”—are likely to persist for the
foreseeable future. Increased globalization and
interconnectivity, increased volatility, lower bond

yields, and lower expected stock returns than in the past all
suggest that it’s prudent for investors
to branch out globally. Global diversification can help in
managing risk and positioning your
portfolio for long-term growth.
As the data below illustrates, there are potentially attractive
investment opportunities outside of
the U.S. While the U.S. markets have performed well recently,
the emerging markets and
individual countries have delivered strong results over time.
Canada was the top-performing
market in 2016 and the bottom performer in 2017. Its results
were largely impacted by energy
prices. And of course various countries are at different stages of
global and economic growth.
If you don’t invest globally, you’re not only narrowing your
opportunity set but ignoring an
important tool to help manage volatility. Though not without
risk, a global allocation provides
diversification benefits and is one of the underpinnings of
modern wealth management.
Why diversify across borders?
Source: Charles Schwab & Co., Inc., with data from FactSet,
MSCI as of December 31, 2017. Geographical performance is
represented by annual
total returns for the following: MSCI AC World, MSCI USA,
MSCI Japan, MSCI United Kingdom, MSCI Switzerland, MSCI
Germany, MSCI

France, MSCI Canada, MSCI Australia, MSCI Nordic Countries,
MSCI Spain, MSCI EM (Emerging Markets). Indexes are
unmanaged, do not
incur fees or expenses, and cannot be invested in directly. Past
performance is not guarantee of future results. Diversification
strategies do not
ensure a profit and do not protect against losses in declining
markets.
Why does diversification work?
A diversified portfolio owns a portion of many asset classes, so
it can benefit from owning top
performers without bearing the full effect of owning bottom
performers. By avoiding the extreme
peaks and valleys of each individual asset class, a diversified
portfolio can help manage volatility
over time, and can help outperform a less-diversified portfolio
over the long run.
Source: Morningstar Direct and the Schwab Center for Financial
Research. Data is from January 1, 2001, to December 31, 2017.
The 60/40 portfolio is a hypothetical portfolio consisting of
60% S&P 500® Index Stocks and 40% Bloomberg Barclays U.S.
Aggregate Bond
Index bonds. The diversified portfolio is a hypothetical
portfolio consisting of 18% S&P 500, 10% Russell 2000, 3%
S&P U.S. REIT, 12% MSCI
EAFE, 8%, MSCI EAFE Small Cap, 8% MSCI EM, 2% S&P
Global Ex-U.S. REIT, 1% Bloomberg Barclays U.S. Treasury,
1% Bloomberg
Barclays Agency, 6% Bloomberg Barclays Securitized, 2%
Bloomberg Barclays U.S. Credit, 4% Bloomberg Barclays
Global Agg Ex-USD, 9%

Bloomberg Barclays VLI High Yield, 6% Bloomberg Barclays
EM, 2% S&P GCSI Precious Metals, 1% S&P GSCI Energy, 1%
S&P GSCI
Industrial Metals, 1% S&P GSCI Agricultural, 5% Barclays
U.S. Treasury 3–7 Yr. Including fees and expenses in the
diversified portfolio would
lower returns. The portfolio is rebalanced annually. Returns
include reinvestment of dividends, interest and capital gains.
Indexes are unmanaged,
do not incur fees or expenses, and cannot be invested in
directly. Past performance is no indication of future results.
Diversification
strategies do not ensure a profit and do not protect against
losses in declining markets.
To illustrate the value of diversification, let’s compare the
growth of $100,000 invested in three
hypothetical portfolios prior to two extreme periods: the
bursting of the tech bubble—which
inflated in the late 1990s—and the Great Recession of 2007–
2009. If an investor had held only
U.S. large-cap stocks, as represented by the S&P 500®, their
portfolio would be worth over
$283,000. Had they invested the same amount in a more
conservative blend of 60% stocks and
40% bonds, they’re portfolio would have weathered the market
storms a bit better, but would
have trailed during the recent bull run ($268,644). But had they
been globally diversified, with
assets varied enough to temper market turbulence and
positioned to take advantage of overseas
opportunities, their $100,000 stake would have grown to
$338,920.
The only “free lunch” in finance

Nobel Prize–winning economist Harry Markowitz, the father of
Modern Portfolio Theory (MPT),
was the first to demonstrate that a diversified portfolio can
deliver improved performance and
lessened risk relative to individual asset classes. This notion
that you’d get something for nothing
is nearly unheard of in economics. And it’s why Markowitz
famously called diversification “the
only ‘free lunch’ in finance.”
The key concept behind the “free lunch” is correlation—or
rather, a lack of it. Typically, the
performance of individual asset classes aren’t perfectly
correlated. If asset values do not move up
and down in perfect harmony, then a diversified portfolio will
have less risk than the weighted
average risk of its parts.
Unfortunately, as we’ve experienced increasing bouts of
volatility around the globe, correlations
have been rising over the last several years, testing the precepts
of MPT. We live in a more
complex world than when Markowitz wrote his seminal work,
with an expanded number of asset
classes and markets that are more interconnected than at any
time in our history.
However, it’s important to understand that even during periods
of market stress, when
correlations tend to increase, diversification still provides
benefits as long as assets don’t move
in perfect lockstep. It’s also important to recognize that asset
allocation strategies can be
dynamic—both in choosing which asset classes to include and

in making tactical adjustments to
reflect changes in the market, the global economy and even your
personal circumstances.
What a globally diversified portfolio looks like
Today, asset allocation has evolved beyond domestic stocks,
bonds and cash to include global
diversification across equities, fixed income and nontraditional
investments.
nternational, including
emerging markets
international bonds,
emerging market bonds, high yield bonds
investment trusts (REITs) and
others
Strategic asset allocation requires a long-term view, and it
shouldn’t be unduly influenced by
short-term considerations. This is an investment strategy for the
long haul that requires patience
and discipline. The right mix of assets for you and your goals
should be based on your risk
tolerance, cash flow needs, investing experience and time
horizon, among other factors. And you
should revisit your allocation periodically, if there is a change
in your circumstances or
whenever your goals or objectives change.

Google BigQuery
Description and purpose
Google BigQuery is serverless data warehouse and a cloud-
based big data analytics web service for processing very large
read-only data sets. BigQuery is highly scalable enterprise data
warehouse. It helps data analysts to be more productive with its
performance. With the BigQuery, you don’t have to worry for
you infrastructure. You can just use SQL to perform analysis
and get insights without a data administrator.
You can stream and analyze the data by creating logical data
warehouse over managed columnar storage, object storage and
spreadsheets. It also has in memory BI engine, which can be
used to create dashboards and reports. It is even a secure means
of sharing queries, data sets, insights within your organization.
It has capability to build and operationalize ML solutions and
perform geospatial analysis.
Distinctive Features
· Flexible data ingestion
One can load the dataset from google cloud storage and directly
stream it into BigQuery and perform real time analysis.
· Ease of Collaboration
Big data sets can be saved, shared and accessed using BigQuery.
One can even customize the permissions on the dataset.
· Fast and performant
Its columnar architecture helps in handling the nested and
repeated fields in a highly efficient manner, which helps in
saving both time and money.
· Strong partner ecosystem
Many leading tools like informatica and tableau have partnered
with BigQuery to perform loading, visualization and

transforming.
· Affordability
Loading and exporting of data, metadata operations are free of
cost. User are charged on the basis of what they store and what
queries they do. Even 1Tb of processed data each month is
free.
Use Cases
· Data Warehouse solution
Big Query can replace the typical hardware setup for the
traditional data warehouse. it can be a place to perform all the
analytical processes and subsequently reducing the cost of
require hardware as well as operating cost.
· Retailers
It can be used by retailers for forecasting their sales.
Cloud Dataflow
Google Cloud Dataflow Cloud Dataflow is a fully-managed
service for transforming and enriching data in stream (real time)
and batch (historical) modes with equal reliability and
expressiveness. It allows you to build pipelines, monitor their
execution, and transform and analyse data, all in the cloud.
Cloud dataflow also helps in gaining actionable insights from
the data while reducing the operational costs without hassles of
deploying, maintaining or scaling infrastructure.
It is basically collection of SDKs for building batch or
streaming parallelized data processing pipelines.
Cloud Dataflow can be used for:
ETL
· Movement, Filtering, enrichment, Shaping,

ANALYSIS
· reduction, Bach Computation, continuous computation
ORCHESTRATION
· Composition, External orchestration, simulation
· Automated Resource Management
Cloud Dataflow can automate provisioning and management of
processing resources to minimize latency and maximize
utilization.
· Dynamic work Rebalancing
The lagging work is dynamically rebalanced by optimizing and
automating work partitioning.
· Reliable and consistent exactly once processing
· It provides built in support for fault tolerant execution which
is consistent and correct regardless of data size, cluster size,
processing pattern or pipeline complexity.
· Built on foundation for Machine learning
Cloud Dataflow is very convenient to use as integration point to
bring predictive analytics to fraud detection and real time
personalization by adding TensorFlow based Cloud Machine
learning models and API’s to data processing pipelines
Use Cases
· Point-of-Sale analysis and segmentation in the retail world
· Fraud detection in the financial industry
· IoT information in the healthcare and manufacturing industries
Cloud Dataproc
Cloud Dataproc is a fast, easy-to-use, low-cost and fully
managed service that lets you run the Apache Spark and Apache

Hadoop ecosystem on Google Cloud Platform. Cloud Dataproc
provisions big or small clusters rapidly, supports many popular
job types, and is integrated with other Google Cloud Platform
services, such as Cloud Storage and Stackdriver Logging, thus
helping you reduce TCO.
Cloud Dataproc is a managed framework that runs on the
Google Cloud Platform and ties together several popular tools
for processing data, including Apache Hadoop, Spark, Hive, and
Pig. Cloud Dataproc has a set of control and integration
mechanisms that coordinate the lifecycle, management, and
coordination of clusters. Cloud Dataproc is integrated with the
YARN application manager to make managing and using your
clusters easier.
· Automated Cluster Management
Its automated cluster management helps user to concentrate only
on data, not on the cluster as it manages deployment,
monitoring and logging on its own.
· Developer Tools
It provides multiple ways to manage the cluster which includes
easy-to-use Web UI, the Google Cloud SDK, RESTful APIs,
and SSH access.
· Integrated
It has built in integration with cloud storage, BigQuery,
Bigtable, Stackdriver logging and Stackdriver Monitoring,
prividing a complete and robust data platform.
· Versioning
With Image versioning user can toggle between different
versions of Apache Spark, Apache Hadoop, and other tools.
Use Cases
· Database separation
It can definitely be used in database separation like tasks as
these tasks take a lot of time because of the data. Dataproc can

deal with these kinds of problems very efficiently and can
definitely save a lot of time.
· The use of clusters can help in predicting the opportunities for
determining the future sales, this increasing efficiency.
Cloud Pub/Sub
Cloud Pub/Sub brings the adaptability and dependability of big
business message-arranged middleware to the cloud. In the
meantime, Cloud Pub/Sub is a scalable, durable event ingestion
and delivery system that fills in as an establishment for modern
day stream analytics pipelines. It is a fully-managed real-time
messaging service that allows you to send and receive messages
between independent applications. with cloud pub/sub user can
leverage Cloud Pub/Sub’s flexibility to decouple systems and
components hosted on Google Cloud Platform or elsewhere on
the Internet.
· Open
Open APIs and client libraries in seven languages support cross-
cloud and hybrid deployments.
· Exactly one processing
Cloud Dataflow supports reliable, expressive, exactly-once
processing of Cloud Pub/Sub streams.
· No provisioning, auto-everything
Cloud Pub/Sub does not have shards or partitions. Just set your
quota, publish and consume.
· Compliance and security
Cloud Pub/Sub is a HIPAA-compliant service, offering fine-
grained access controls and end-to-end encryption.
· Seek and replay

Rewind your backlog to any point in time or a snapshot, giving
the ability to reprocess the messages. Fast forward to discard
outdated data.
· Integrated
Take advantage of integrations with multiple services, such as
Cloud Storage and Gmail update events and Cloud Functions for
serverless event-driven computing.
Use Cases
· Workload migration and hybrid cloud features allows for easy
access anywhere. Workload is managed in a way that makes it
easier for businesses to compile and sort files, data and manage
applications.
· Balancing workloads in network clusters
a large queue of tasks can be efficiently distributed among
multiple workers, such as Google Compute Engine instances.
· Distributing event notifications
For example, a service that accepts user signups can send
notifications whenever a new user registers, and downstream
services can subscribe to receive notifications of the event.
· Logging to multiple systems
For example, a Google Compute Engine instance can write logs
to the monitoring system, to a database for later querying, and
so on.
Cloud Data Fusion
Cloud Data Fusion is a fully managed, cloud-native data
integration service that helps users efficiently build and manage
ETL/ELT data pipelines. It provides a graphical interface to
increase time efficiency and reduce complexity, and allows
business users, developers, and data scientists to easily and

reliably build scalable data integration solutions to cleanse,
prepare, blend, transfer and transform data without having to
wrestle with infrastructure.
· Code-free self-service
It Removes bottlenecks by enabling nontechnical users through
a code-free graphical interface that delivers point-and-click data
integration.
· Collaborative data engineering
Data Fusion offers the ability to create an internal library of
custom connections and transformations that can be validated,
shared, and reused across an organization.
· GCP-native
Fully managed, GCP-native architecture unlocks the scalability,
reliability, security, and privacy guarantees of Google Cloud.
· Integration metadata and lineage
Search integrated datasets by technical and business metadata.
Track lineage for all integrated datasets at the dataset and field
level.
· Hybrid enablement
Open source provides the flexibility and portability required to
build standardized data integration solutions across hybrid and
multi-cloud environments.
· Comprehensive integration toolkit
Built-in connectors to a variety of modern and legacy systems,
code-free transformations, conditionals and pre/post processing,
alerting and notifications, and error processing provide a
comprehensive data integration experience.
Use Cases
· Modern, more secure cloud data lakes
Cloud Data Fusion helps users build scalable, distributed data
lakes on GCP by migrating data from siloed on-premises
platforms. users can leverage the scale of the cloud to centralize

data and drive more value out of their data as a result. The self-
service capabilities of Cloud Data Fusion increase process
visibility and lower the overall cost of operational support.
· Unified analytics environment
Many users today want to establish a unified analytics
environment across a myriad of expensive, on-premises data
marts. Integrating data from all these sources using a wide
range of disconnected tools and stop-gap measures creates data
quality and security challenges. Cloud Data Fusion’s vast
variety of connectors, visual interfaces, and abstractions
centered around business logic helps in lowering TCO,
promoting self-service and standardization, and reducing
repetitive work.
Google Data Studio
Google Data Studio is a fully managed visual analytics service
that can help anyone in the organization to unlock insights from
data through easy-to-create and interactive dashboards that
inspire smarter business decision-making. When Data Studio is
combined with BigQuery BI Engine, an in-memory analysis
service, data exploration and visual interactivity reach sub-
second speeds, over massive datasets.
· Connect ability
With Data Studio, user can easily report on data from a wide
variety of sources, without programing. User can connect to
data sets such as:
· Google Marketing Platform products, including Google Ads,
Analytics, Display & Video 360, Search Ads 360
· Google consumer products, such as Sheets, YouTube, and

Search Console
· Databases, including BigQuery, MySQL, and PostgreSQL
· Flat files via CSV file upload and Google Cloud Storage
· Social media platforms such as Facebook, Reddit, and Twitter
· Sharing
Google data studio makes it easy to share insights with
individual, teams or anyone. With it you can invite anyone to
view or edit the reports. Reports can be embed in other pages
like google sites, blog posts, marketing articles and annual
reports. When you share a Data Studio file with another editor,
you can work it together in real time as a team.
Use Cases
· With this tool we can analyze and measure what happens in
any website, something essential when carrying out online
marketing campaigns. Measuring is necessary to improve any
online process.
· As a company, it can provide many benefits, like streamlining
the process to create web reports and capture our information
when building useful and actionable dashboards.
Cloud Dataprep
Google Cloud Dataprep is an intelligent data service for
visually exploring, cleaning, and preparing structured and
unstructured data for analysis. Cloud Dataprep is serverless and
works at any scale. Cloud Dataprep in collaboration with
trifacta is an intelligent data service for visually exploring,
cleaning, and preparing structured and unstructured data for
analysis. Because Cloud Dataprep is serverless and works at any
scale, there is no infrastructure to deploy or manage. Your next
ideal data transformation is suggested and predicted with each
UI input, so you don't have to write code. And with automatic

schema, data type, possible joins, and anomaly detection, you
can skip time-consuming data profiling and focus on data
analysis.
· Predictive transformation
It uses a proprietary inference algorithm to interpret the data
transformation intent of a user’s data selection. It automatically
generates a ranked set of suggestions and patterns for the
selections to match.· Parameterization
It can execute a recipe across multiple instances of identical
datasets by parameterizing a variable to replace the parts of the
file path that change with each refresh. This variable can be
modified as needed at job runtime.
· Collaboration
It is useful in team environments to have multiple users work on
the same assets or to create copies of good quality work to serve
as templates for others. Cloud Dataprep enables users to
collaborate on the same flow objects in real time or to create
copies for others to use for independent work.· Target matching
Define target schemas, through imported or created datasets,
and assign to an existing recipe to systematize and speed up
your wrangling efforts. Targets appear in the Transformer page
and can be applied against the entire dataset or selected
columns of the dataset you need to wrangle.
Use Cases
· There are many business problems this product is solving for
example its less time consuming since it analyzes many issues
itself which includes data transformation and its predicted with
each UI input. It provides user with access and prepare data
from storage themselves. It makes data handling very easy.
· Preparing log data for analytics, basic cleansing and parsing.
Instead of doing this manually in Google Sheets, Dataprep has

automated most of this in a few steps.
Cloud BigTable
Google Bigtable is a distributed, column-oriented data store
created by Google Inc. to handle very large amounts of
structured data associated with the company's Internet search
and Web services operations. Google Bigtable serves as the
database for applications such as the Google App Engine
Datastore, Google Personalized Search, Google Earth
and Google Analytics.
· Fast and performant
Cloud BigTable can be used as storage engine for large scale,
low latency apps as well as throughput-intensive data
processing and analytics.
· Seamless scaling and replication
It can provision and scale hundreds of petabytes, and it can
even smoothly handle millions of operations per second.
changes to deployment configuration are very fast, thus
reducing downtime during configuration. Replication adds high
availability for live serving apps, and workload isolation for
serving vs. analytics.
· Simple and integrated
Cloud Bigtable integrates easily with popular big data tools
like Hadoop, Cloud Dataflow, and Cloud Dataproc. Plus, Cloud
Bigtable supports the open source industry standard HBase API,
which makes it easy for your development teams to get started.
Use Cases
· It can be easily deployed and used by big companies to
monitor the data from any of their location.

· It can be used as storage engine for large scale, low latency
applications as well as throughput intensive data processing and
analytics.
Cloud Storage
Cloud Storage is a unified object storage solution that allows
worldwide storage and retrieval of any amount of data at any
time. Cloud Storage can be used for a range of scenarios,
including serving website content, storing data for archival and
disaster recovery, or distributing large data objects to users via
direct download. With the cloud storage one can easily access
data instantly from any storage class. It can also reduce data
storage carbon emissions to zero.
· Designed for eleven 9’s of durability
Cloud Storage is designed for 99.999999999% durability. It
stores data redundantly, with automatic checksums to ensure
data integrity. With Multi-Regional Storage, your data is
maintained in geographically distinct locations.
· Strongly consistent
When a write succeeds, the latest copy of the object is
guaranteed to be returned to any GET, globally. This applies to
PUTs of new or overwritten objects and DELETEs.
· A single API for all storage classes
Cloud Storage’s consistent API, latency, and speed across
storage classes simplifies development integration and reduces
code complexity. Implement Object Lifecycle Management to
set a Time to Live (TTL) for objects, archive older version of
objects, or downgrade storage classes without compromising on
latency or accessibility. Set custom policies to transition data

seamlessly from one storage class to the next, depending on
your cost and availability needs at the time.
Use Cases
Instead of having to send a giant email that has all recipients
entered by hand, we can just share a document on the cloud, and
everyone has instant access. Google will even notify people by
email that a new document has arrived into their cloud storage,
which helps remind people.
Cloud Datalab
Cloud Datalab is a powerful interactive tool created to explore,
analyze, transform, and visualize data and build machine-
learning models on Google Cloud Platform. It is an interactive
notebook based on Jupyter, and it's integrated
with BigQuery and Cloud Machine Learning Engine to provide
easy access to key data processing services. And with
TensorFlow or Cloud Machine Learning Engine, you can easily
turn data into deployed machine-learning models ready for
prediction.
· Machine Learning
It Supports TensorFlow-based deep ML models in addition to
scikit-learn. Scales training and prediction via specialized
libraries for Cloud Machine Learning Engine.
· Multi-Language Support
Cloud Datalab currently supports Python, SQL, and JavaScript
(for BigQuery user-defined functions).
· IPython Support
Datalab is based on Jupyter (formerly IPython) so you can use a

large number of existing packages for statistics, machine
learning etc. Learn from published notebooks and swap tips
with a vibrant IPython community.
· Pay-per-use Pricing
Only pay for the cloud resources you use Google Compute
Engine VMs, BigQuery, and any additional resources you
decide to use, such as Cloud Storage.
Use Cases
· It can be used to connect the data together from various
different sources.one can relate the defects, quality and cost
aspects of the products of company from different regions.
Visualization the Datalab can also help in providing the better
picture of current state of affairs. It can help companies in
providing ideas where the improvement is needed in their
business.

c a p i ta l a c u m e n • Issue 21 • 2012 21c a p i ta l a c u m e
n • Issue 21 • 2012 21
How to
Invest In tHe
Rest
the best way to tap into the rise of the
emerging markets may well be through select
U.s.-based corporations with global reach.
By Ian prIor, U.S. Trust
tHe woRld dIdn’ t stoP
turning in 2008, but in a sense
it did turn upside down: the
United states entered the Great
Recession, followed in short
order by others in the western
economic bloc, including Great

Britain, Japan and virtually all
of europe. After a century as
arguably the greatest industrial
and consumer force in history,
the west, with the U.s. consumer
at the forefront, saw its top-dog
standing slip.
At about the same time, a slew
of eternal underdog developing
nations, sometimes dubbed the
Rest, including China and India,
with several decades of steady
urbanization and industrial-
ization behind them, found
themselves at long last standing
almost toe-to-toe with the west.
It was an upending on a mas-
sive scale, what some have called
a great global shift — and the
world may never be the same
again. what’s more, says
Joseph P. Quinlan, chief mar-
ket strategist at U.s. trust,
“this rebalancing of the global
economy is one of the most
important trends of our time.”
m a n a g e m e n t
W e a l t h
Jo
c

h
e
n
A
r
n
d
t
/
P
l
A
in
P
ic
t
u
r
e
figure 1: the developing nations’ share of world GdP Is Already
Above 50%
(Based on Purchasing-Power-Parity [PPP] share of world total)
figure 2:

the Global Rise
of the Middle Class
Source Figure 1: IMF April 2012 WEO Database. Data for
2012–2017 is estimated.
Source Figure 2: Global Trends 2030 Report, Institute for
Security Studies. Data as of May 7, 2012. Data for 2020–2030 is
estimated.
B
il
li
on
s
of
p
eo
pl
e
2009
5
4
3
2
1
2020 2030

3.2
$
B
il
li
on
s
60
50
40
30
20
10
0
90 91 92 93 94 95 96 97 98 99 00 01 02 03
04 05 06 07 08 09 10 11 12 13 14 15 16 17
1.8
ustrust.com/capitalacumen 22
consumers worldwide in 2009,
with more than half (54%) of
these consumers domiciled in
north America and europe, or

the developed nations. By 2020,
however, the same group is
expected to jump to 3.2 billion
consumers and then by 2030 to
4.9 billion. “Almost all of this
increase is expected to come
from the emerging markets,
whose share of the global
middle class is expected to rise
from 46% in 2009 to 62% in
2020 and then to roughly 80%
in 2030,” Quinlan says.
InvestIng through
the sIde door
As you might expect, whenever
economies are growing, invest-
ment opportunities arise. But
for many investors (including
some U.s. trust clients), the
global rebalancing presents
a dilemma. they would like
to benefit from this rise in
consumerism in the emerging
markets but are reluctant to
invest directly in companies in
those countries.
their caution is understand-
able. Many developing nations,
after all, still have work to do
before they can shed a long-
standing reputation for corpo-
rate accounting irregularities,
political unrest, currency in-

stability and other factors that
typically give prudent investors
cause for concern. Fortunately
for the reticent investor, many
companies that seem likely to
benefit from the rise of the de-
veloping world are not actually
based in the developing world.
Rather, they are predominantly
U.s.-based and have names
familiar to most of us.
says Quinlan: “workers in
the developing nations are also
consumers. Yes, they save more
than the average American, but
factory and office workers —
whether in Beijing, Bangalore or
Bratislava — are not averse to
spending some of their income
on themselves or their fami-
lies. And the more these new
consumers spend, the more de-
mands they place on the world’s
energy and food infrastructure,
with the rise in energy and food
prices over the past decade
directly tied to soaring consump-
tion levels and more western-
4.9
the
developing
nations’
share of

world gdp
is already
above 50%.
MIddle Class rule
what’s behind this remarkable
makeover? “At its core are the
burgeoning middle classes of
China, Brazil, India and
turkey, and consumers else-
where in the developing na-
tions,” Quinlan says. “where-
as past generations of workers
across those countries spent
saturdays on the factory floor,
today ’s workers are likely to
be found in air-conditioned
malls on the weekend, spend-
ing their income on goods and
services the average American
takes for granted.”
Figure 1 shows the growing
power of the emerging markets
as a percentage of the world’s
Gross domestic Product, or
GdP. note the significant rise
since 2000. the emerging
markets already account for
a greater share of world GdP
than the United states and its
western cohorts.
Figure 2, perhaps just as
telling, depicts the dramatic
rise of the global middle class.

According to the Brookings
Institution, this middle income
group totaled roughly 1.8 billion
W e a l t h m a n a g e m e n t
figure 3: Urban Populations, 2010
20%Cambodia
Kenya
india
Thailand
Pakistan
eg ypt
indonesia
China
united States
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
30%
34%
36%

44%
47%
82%
22%
43%
c a p i ta l a c u m e n • Issue 21 • 2012 23
like lifestyles in the developing
nations. And this same dynamic
has been hugely beneficial to
many U.s.-based multinational
companies, ranging from auto-
makers to retailers to consumer
electronics producers.”
In short, investors wary of
lesser-known companies in
emerging markets can instead
turn to brand-name U.s.-based
corporations with global reach.
More on those companies later.
CIty-Bound,
upwardly MoBIle
Most if not all of the countries
that constitute the Rest —
those with economies that are
growing impressively even
as the west’s appear to be
producing anemic growth at
best — have undergone varying

degrees of urbanization. “Rural
inhabitants moving to the big
city is a key factor in promoting
consumption — and is probably
the main factor in a region’s
economic rise,” says Quinlan.
“Rural life is difficult, with
many people living without po-
table water and electricity, and
dependent on kerosene or even
cow dung for light and heat. A
small plot of land provides a mini-
mal amount of food for a typical
family. life in the rural areas, in
other words, is rather simple and
devoid of consumption.”
But things change when
people move from the farm to
the big city, he says. “take a
woman who relocates from a
poor rural village to a major
industrial center to work in a
manufacturing plant. she will
use more water and eat more
food, and as her income rises,
she will have discretionary
income to buy goods for herself
— clothing, consumer electron-
ics and the like. she is becoming
a global consumer. And there
were nearly 250 million more
people just like her in China
alone over the past decade.”

For the first time in history,
in fact, just as many people
live in cities as in the coun-
try — the global urbanization
rate reached 50% in 2010 and
is expected to jump to two out
of three people in the next few
decades. “ that’s a remark-
able trend often overlooked by
American investors, and per-
haps for good reason: Roughly
82% of the U.s. population lives
in a city,” Quinlan says. “Ur-
banization, in other words, is
nothing new or unusual to most
of us. But urbanization is one
of the most significant global
macro trends of our times.”
Figure 3 gives some sense of
urbanization around the world.
Urbanization not only
increases the demand for food,
water, electricity and other
forms of energy; it also places
new demands on governments
for housing, schools, hospitals
and other basic services. “ that
means more capital goods will
be required to help build out the
infrastructure — think heavy
equipment, pumps, valves, and
other infrastructure-related
goods and services,” Quinlan
adds. “ the demand for tele-

communications equipment,
consumer electronics and
services will also climb as more
and more people come online
and get connected.”
emblematic of rising con-
sumption levels in developing
nations are rising imports,
with those countries’ share
of world imports climbing
from around 30% of the total
in 1999 to over 45% in 2011.
In the not-too-distant future,
the share will almost certainly
top 50%. this rebalancing is
evident in Figure 4.
Country Breakdown
while they may share similari-
ties, no one developing nation
has undergone exactly the
same changes as another.
As a result, investment oppor-
tunities will differ by country
or by region. Quinlan’s views
on which industries seem
urbanization
is one of
the most
significant
global macro
trends of
our times.

Source: United Nations. Data for 2010.
Source: International Monetary Fund Direction of Trade
Statistics. Data through 2011.
figure 4: the Baton of Consumption Has shifted to the Rest
(developing nations’ Percentage of world total Imports)
50%
45%
40%
35%
30%
25%
20%
90 94 98 02 0692 96 00 04 08 1091 95 99 03 0793 97 01 05 09
11
ustrust.com/capitalacumen 24
likely to prosper from the rise of
the Rest follow each country’s
description.
China is far and away the
largest component in the rise
of the Rest. And even though

Beijing recently announced
its plan to strategically lower
the nation’s three-decade-long
annual growth rate of 10%, the
new target, 7.5%, is still far
above the current U.s. growth
rate of about 2.5%. one way
the Middle Kingdom plans
to accomplish this strategic
slowdown is by shifting its
focus from exports to imports,
or from its industries to its
consumers. says Quinlan:
“ this pivot toward more
consumption-led growth — a
long-term prospect, for sure —
should prove to be hugely
beneficial to China. we also
think it will be a significant
source of sales for American
companies for the foreseeable
future.” Look for opportunities
in luxury goods, automobiles,
food and beverages, infrastruc-
ture development, technology,
and hotels and tourism.
india. Infrastructure devel-
opment in India has been a
key theme for the past 10 years
and will likely remain so for
the next couple of decades,
as the “ tiger” still has much
work to do. “nearly one-fourth
of the country, or over 300 mil-
lion Indians, has no access to

safe drinking water; over 300
million have no access to elec-
tricity, and half the population
does not have sanitation facili-
ties,” says Quinlan. what’s
more, “over the past 50 years
or so, India’s total vehicle traf-
fic rose more than a hundred-
fold, whereas the road network
increased just eightfold. Four
major highways constitute
2% of the entire nation’s road
network but carry 40% of
the combined traffic load. At
the same time, there are 830
million mobile phone subscrib-
ers.” Look for opportunities in
commodities, building materials,
construction machinery, trans-
portation equipment, financial
institutions, communication
equipment, technology services
and related subsectors.
Latin America. Real GdP
growth in latin America
slowed in 2011, but the region
still managed to expand by
4.5%, nearly triple the rate of
growth of the advanced econo-
mies as a bloc. “ the region
is not without problems, but
this isn’t your father’s latin
America,” Quinlan notes.
“Political stability, prudent

macroeconomic policies, mod-
erating inflation — all of these
metrics have become staples
in the region. Another key
dynamic, reflecting rising per
capita incomes and a budding
middle class, is that personal
consumption expenditures in
latin America totaled roughly
$2.6 trillion in 2009, double
the level of consumer spend-
ing in the Middle east and
Africa and nearly one-third
larger than spending in cen-
tral europe.”
while poverty remains
acute in some parts of the
western hemisphere, says
Quinlan, “poverty rates in
latin America declined by over
10 percentage points between
2002 and 2008, pulling more
than 40 million people out
of poverty, according to the
world Bank, and income
inequality has been greatly re-
duced over the past decade. In
Brazil, now a regional econom-
ic powerhouse, the nation’s
per capita GdP was nearly
$12,788 in 2011, more than
three times the $3,761 level of
2000. Against this backdrop,
it is no wonder that Brazil has

emerged as a key consumer of
many U.s. goods and services,
and is now a global leader in
consumption. For instance,
emerging
marKets
are driving
global
growth,
creating new
investment
opportunities.
W e a l t h m a n a g e m e n t
figure 5:
top 20 Most valuable U.s.-Based Global Brands
top 20 U.s. brands are extracted from BrandZ top 100 Brands,
a listing that includes U.s. and non-U.s. companies. excludes
financial companies. data as of May 23, 2012.
ranking in
Top 100 List Brand
Brand Value
2012 ($mil) Category
1 Apple $182,951 technology
2 iBM $115,985 technology
3 google $107,857 technology
4 McDonald's $95,188 Fast Food
5 Microsoft $76,651 technology
6 Coca- Cola $74, 286 Soft drinks

7 Marlboro $73,612 tobacco
8 AT&T $68,870 telecom
9 Verizon $49,151 telecom
11 ge $45,810 conglomerate
16 uPS $37,129 logistics
17 Walmart $34,436 retail
18 Amazon $34,07 7 retail
19 facebook $33, 233 technology
26 HP $22,898 technology
27 Oracle $22,529 technology
33 gillette $19,055 Personal care
34 exxonMobil $18, 315 oil and Gas
35 Pampers $18, 299 Baby care
4 2 Starbucks $17,072 Fast Food
c a p i ta l a c u m e n • Issue 21 • 2012 25
suMMary
“ this new era of globalization
is at the heart of our invest-
ment thinking — that, yes, the
emerging markets represent
both risks and rewards for the
old economic order. But their
inclusion and leadership in
driving global growth — nota-
bly consumption — is hugely
bullish for world financial mar-
kets,” Quinlan says. “notable
here are western multination-
als with significant exposure to
the developing nations and to
those emerging markets where
consumption is going main-
stream. An exciting new phase

of globalization has begun, and
the rewards for investors out-
weigh the risks, in our view.”
Figure 5 offers a sampling of
these types of companies.
If you’d like to learn more
about investing in the Rest,
please contact your U.s. trust
advisor. CamA
r
t
in
P
o
o
l
e
the latin giant is now the
third-largest beauty market
in the world after the United
states and Japan.” Look for
opportunities in transportation,
financials, energy, materials
and food products.
Africa. “ the continent has
long been challenged by a wide
variety of geographical, eco-
nomic and political obstacles,”
Quinlan says. “But sub-
saharan Africa alone has be-

come the second-fastest-grow-
ing region in the developing
world, behind developing Asia.
demand for food there is ex-
pected to reach $100 billion by
2015, double the levels in 2000.
the dramatic economic growth
and spread of democracy have
attracted the attention — and
the capital — of multination-
als and private equity inves-
tors.” the African develop-
ment Bank estimates that the
continent now has around 300
million people with incomes in
excess of their basic needs, a
rise of more than 60% from a
decade ago. Look for opportuni-
ties in food products, technology,
telecommunications, energy,
agriculture and tourism.
Central and eastern europe.
“ this area has been hurt by
the eurozone debt crisis, al-
though the underlying dynam-
ics of the region remain quite
promising,” Quinlan says. “In-
deed, markets like Poland, the
Czech Republic, slovakia and
others in the region represent
new and untapped markets for
corporate America. expansion
of the european Union (eU)
has given U.s. firms access
to new consumers. Polish

workers and others are also
c o n s u m e r s , a n d c o n s u m -
e r i s m — a s m easured by
personal consumption expen-
ditures — has soared over the
past decade in the east, owing
to greater employment, ris-
ing incomes and, most of all,
pent-up demand for western
goods after decades of denial.”
All told, personal consumption
in eastern europe doubled
between 1990 and 2005 and
then nearly doubled again
by 2010, when expenditures
totaled an impressive $2.3
trillion. “ that is not bad for a
part of the world held under
lock and key and cut off from
the global markets during
the Cold war,” Quinlin adds.
“In the end, consumption is
serious business in Central
and eastern europe, account-
ing for nearly 60% of GdP in
2010.” Look for opportunities in
consumer products, technology
and communications.

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