The race is on. At stake: USD21.7 trillion to be spent on new infrastructure in the developing world over the next decade, and trillions more in the US, Japan and Western Europe.

The needs are myriad. In the developed world, roads and bridges are crumbling. Water supplies are deteriorating. The past century’s communications networks and power systems are increasingly overloaded and prone to outages, at the same time constant connectivity is becoming ever-more essential to 21st century commerce.

In the developing world, rural dwellers are moving to cities in record numbers in search of better lives. That’s putting an unprecedented strain on countries such as China at the very time they’re trying to modernize. And all nations are hard pressed to reduce smokestack emissions–including carbon–to preserve the environment, not just for the future but for the current increasingly challenged generation.

This is indeed a budding crisis. But just as there is danger, this one also brings massive opportunities. Simply, the companies that tap into them are headed for unprecedented prosperity, and their investors will reap a windfall. Pointing out the opportunities is why we’re here.

At first glance, this may seem an odd time to launch a service essentially betting on global growth and tackling historic challenges. Here in late September 2008, global stock markets are in crisis. Major US financial houses, which seemed impregnable only weeks ago, have been buried under America’s mortgage crisis, forcing Uncle Sam to bail them out. The credit markets are in a constant state of shock, with weaker credits forced to pay more than 8 percentage points above Treasury yields to borrow.

The US economy, although still not technically in a recession, shows all signs of slipping into one, from slackening output to rising unemployment. And while prices of energy and other raw materials have fallen sharply the past three months or so on recession fears, they’re still far higher than just a few years ago, squeezing profit margins and forcing layoffs at scores of companies.

All eyes now are on Washington, where the US Congress is apparently nearing a bipartisan compromise to create a USD700 billion fund to get bad assets off the books of US financial institutions. Failure could be catastrophic, setting off a new round of vicious market selling. Fortunately, there is precedent for success here.

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In the early 1990s, President Bill Clinton took the then extremely unpopular step of bailing out Mexico, a country with obvious extensive ties to the US and which had become a financial black hole for major US banks. Some might remember Citigroup’s (NYSE: C) descent into single digits, as the crisis threatened its very solvency. The government’s decisive action stabilized the banks and the markets, and the US government ultimately turned a profit on the money it loaned out.

This time around, the threat to US financial institutions is all home grown, specifically years of overleverage and overlending, with little oversight and rich rewards for taking on extreme risks. Some have speculated we’re on a road of no return toward socialism, depression or worse.

My take is considerably more benign, and is highlighted in The Salon, our blog section, in the piece entitled Banks and Utilities. In brief, I look for the US financial industry over the next few years to follow the example of the US utility industry, which went through its own meltdown in 2001-02 after a wild spree of deregulation. That sector has since recovered and then some. Regulation has increased but so as surety and transparency, and shareholders have reaped the rewards.

Just as utilities are again a good business, so will financials again be. But until the ongoing troubles are sorted out, the danger will remain clear and present for the markets. The good news is every crisis also brings opportunity, and this is no exception.

The biggest: The infrastructure bets that were flying so high just a few months ago are cheaper than ever. Simply, now’s the ideal time to build a portfolio of them, with the bar set low and the potential for profit greater than ever.

The New World 3.0 Portfolio is our roadmap for cashing in on this opportunity. Our focus is long term. We’re looking for companies that are creating real economic wealth by tapping into the investment on amounts to a USD20 trillion-plus steel and concrete pie.

In an uncertain environment where the consumer is retrenching, this is the surest money in the world, backed by the taxing power of governments and other major institutions and motivated by necessity. And the rewards will be massive, particularly for those who buy our picks at today’s depressed prices and patiently hold for the payoff.

Our strategy is active. Every quarter’s earnings are a day of reckoning for every recommendation. If our companies are continuing to progress–creating wealth by tapping into the explosion of global infrastructure spending–we keep them. If they’re not, we dump them and move onto something else.

Our picks fall into three groups. The Red, White and Blue features large US companies tapped into the boom. Beyond Our Borders highlights foreign-based companies in similar positions of dominance. And Cutting Edge Tech spotlights the best and brightest of the fry featuring the most promising emerging technologies.

At this point, the Portfolio lists six selections. Every week, we’ll be adding at least one new recommendation as we discern new opportunities. With the world markets well below their levels of a few months ago, this is a good time to buy. But the best way to go about it is incrementally.

Key Areas

The solutions needed to create the New World are as numerous as the problems of the Old. But the biggest opportunities are in four key areas: Energy, Breakthrough Technologies, Emerging Nation Infrastructure and Developed Economy Essential Services. That’s where we’ve drawn our picks from.

To pinpoint the best in each of these groups, I’ve tapped four co-editors. Providing energy coverage is Elliott Gue, editor of The Energy Strategist. Yiannis Mostrous of The Silk Road Investor is the go-to guy on developing world infrastructure. Gregg Early covers the beat for breakthrough technologies and I’ll be following developed worth essential services.

New World 3.0’s fifth editor is David Dittman, who will be tracking regulatory and political issues around the planet. The 21st century investment markets are increasingly global. But at least for the foreseeable future, they’re going to be highly localized as well.

In many ways, the world of today has evolved exactly the way post-World War II policymakers would have dreamed. Major nations trade, rather than go to war. Capital and free enterprise are on the ascendancy. And ideas are flowing as never before over the Internet.

Cultures, customs and ways of doing things still vary widely from country to country. Successful companies know how to navigate and even embrace the differences. The companies that don’t will wind up courting disaster.

The experience of major oil companies in Russia over the past year provides an excellent case in point. The headlines all focused on the troubles of BP (NYSE: BP), which essentially tried to pull rank on its local partners in the TNK-BP venture. The partners balked and the company wound up having to take less, after a protracted and costly battle. In contrast, ConocoPhillips (NYSE: COP) continues to profit richly from its alliance with Lukoil (OTC: LUKOY).

Discerning what companies are adapting and which aren’t is therefore essential to successful investing globally. And this is a global investment opportunity. Mr. Dittman will give us a read on the pitfalls and challenges, and who’s making it.

This inaugural issue of New World 3.0 features an article from each of my co-editors. Going forward, each will take turns writing a piece every week. The most recent article will listed at the top of the section entitled Perspective 3.0 on the Web site. Portfolio Alerts will be provided when updates are needed on the core recommendations. I’ll also feature a new Viewpoint every week to keep you on top of the latest developments.

We very much appreciate your subscription to New World 3.0 and look forward to a long and profitable relationship. As is the case with all of our products at KCI Communications, we invite your feedback as we try to improve the product in the coming weeks. Thanks again for reading and here’s to many happy investment returns.

Roger S. Conrad

Editor, Roger Conrad’s New World 3.0

September 26, 2008