Today, nearly 30% of U.S. corporate profits come from abroad, versus only 20% when the new century began. And the foreign contribution will continue to expand. The primary beneficiaries will be big blue chips like Boeing (NYSE: BA) and Coca-Cola (NYSE: KO). Excellent research from T. Rowe Price shows that over the last three years global growth has averaged more than 5% annually, and emerging market growth has exceeded 7%, closely imitating the industrial revolution that began to sweep through the developed world some 200 years ago. Despite what will be a potentially scary economic scenario in the U.S. over the next few quarters, the whole global economic scenario, when overlaid onto the Web's Digital Revolution technology, offers profound promise for the astute investor.

On November 8 Rio Tinto (NYSE: RTP) rejected a bid from BHP Billiton (NYSE: BHP). The rejection did not kill the idea of merging the companies, but Rio maintained that the offer was too low. As Rio mounts a defense against BHP, it will be looking to return value to shareholders in a variety of ways. Rio vowed to raise dividends, pay down debt, find more savings in its recent Alcan deal, and increase production. While these goals may not be immediately achievable, Rio is putting pressure on BHP to up its bid. A combination of the two companies would create synergies in operations and in the use of port and rail facilities. The combined company would be the world's largest iron ore producer, aluminum producer, and coal shipper; a producer of 6% of the world's copper; the third-largest diamond producer; and a leading producer of many other materials. The anti-monopoly hounds are already barking at this merger and, if it does happen, some assets will probably have to be sold -- most likely in iron ore. Either way, Rio's shares will likely increase in value as a result of this offer.

Credit-market jitters are back. Investors are scared and panicked. Fear and emotionalism are prevalent. The stocks of some of the largest banking institutions in the world are being treated like start-ups.

But the volatility in financial stocks signals the end of the credit cycle. When the credit cycle ends, banks start to clean up their balance sheets. Bad loans made during good times are written off, and the focus shifts to rebuilding capital. The actors in every credit cycle change, but the story is always the same. In the last cycle, the write-downs were on technology and telecom loans; in the previous cycle, it was emerging market debt; prior to that, commercial real estate; and in the early 1980s, energy firms were the culprits.

In the current credit cycle, structured finance is the linchpin -- think collateralized debt obligations (CDOs), asset-backed securities (ABSs), and structured investment vehicles (SIVs). The Ph.D.s on Wall Street were once again wooed by the elegance and cleverness of their own inventions -- and, of course, by the piles of cash these vehicles generated for their employers. As is often the case with this crowd, common sense and business savvy were lacking -- "simple is sophisticated" is absent in the Ph.D. finance curriculum.

Illinois Tool Works (NYSE: ITW) owns 750 business units in 49 countries. But, to stay focused, ITW uses the "80/20 Rule." This rule focuses the company's efforts on the 20% of its businesses that generate 80% of its revenues. The company works to streamline operations for the 20% of top revenue-generators. Of the 80% of companies that produce the remaining 20% of revenues, those with potential are nurtured by management, and those without are eliminated. ITW's 80/20 Rule is also applied to supplier and customer relationships, favoring key suppliers and customers that do the most business with ITW. This process keeps margins high, new ideas in the pipeline, and management focused in the right direction.