Dear rss free blog,
On
the morning of Columbus Day (US)/Thanksgiving Day (Can.), however
briefly, my personal portfolio reached its high water mark of 2008
summer again. Canada is important, because the loonie, the local
currency, is approaching parity with the US$. Now 97 cents, it was only 77 cents a half year ago.
Later
on Monday, the US market unraveled. Let me explain exactly what I
mean. My total portfolio, which includes American blue chips and my
recommended foreign stocks and funds, plus my IRA, got back to the
7-figure level it was at when I transferred my account to E-trade.
New
money was not added to the portfolio since then for personal reasons.
The former publisher of this newsletter, Rightside Advisors, now
defunct, had stopped paying expenses (and later royalties) owed to my
company. I had to reach into my own pocket to pay expenses for
producing the newsletter and for living, plus hefty legal fees to try
to extract money I was owed.
So
I could not beef up my investment portfolio. By early 2009, I also
was working to finance the restart of www.global-investing.com
with my own money. So there was no way I could put cash into the
sinking stock market, beyond reinvesting dividends.
I
did a certain amount of day trading early in 2009 which I shared with
readers, taking profits on gains I was not sure would continue. So my
tactic could not be called buy-and-hold, something I am accused of
overdoing. By May I stopped the day trading, although it had enabled
me to get out of positions that sometimes were better exited from (in
other cases I would have done better to stay on.)
What
are the lessons? The first one is that you cannot time the market.
Wall Street marches to its own drummer. It has nothing to do with the
economy as a whole, with the exchange rate, with Bear Stearns or
Lehman.
The
second lesson is that international diversification works. The dollar
was riding high when I hit my high water mark along with American
stocks. Since then, the dollar has fallen back to where it was
pre-crisis, boosting the return on almost any market except
Zimbabwe’s.
Stay
the course. Equities still make the most sense in the present
economy. Panic selling is self defeating because markets revert to
the mean.
Shunning
all stocks like they are the Curse of Frankenstein, as some
shell-shocked folks have done, is the way to a poverty-stricken
retirement. The later you buy the more you pay.
That
leads to another one of my fearless forecasts. Wall St. is on course
to rise as long as the Greenback is feeble, because the two are
currently in an obverse relationship. If one goes up the other goes
down. Longer-term, however, this linkage will break. You get to
choose which way it will go. But because I am a US-based investor to
start with, with at last count seven descendants living in this
country, the delinking will not eat up my estate and penalize my
heirs. Taxes may.
As
the fear of Frankstein recedes, the movement of new cash into the US
market will boost equities further. Better earnings prospects into
the yearend will help too.
For
foreign markets, largely outperforming American this year (because of
currency factors), the bell is tolling already. We have been picking
low-hanging fruit but the time has come for greater selectivity.
China,
whose RMB is fixed to the dollar by Beijing fiat, already saw stock
market weakness after an incredible boom. Today Shanghai and Shenzhen
are up again, not because of any Chinese stimulus (that’s old news)
but reacting the Wall Street momentum which washed over Asia this
morning. The stock markets of the world now are reflecting ours. This
is where we are taking some profits today and protecting against a
change in monetary policy.
But
China will not change its currency in the short term. After Israel
and Australia raised interest rates (which ultimately will slow their
export-linked economic growth), the next key central bank meeting
will be Nov. 28, according to Marc Chandler, the senior currency
forecaster at Brown Brothers Harriman. On that day the Norges Bank,
Norwegian CB, will decide whether to raise interest rates from the
current 1.25%.
The
gold market is in a scissors relationship to our national buck, again
temporarily in my view. Precious metal demand from central banks is
offsetting the negative impact of jewelry meltdown, gold miners
unwinding forward sales, and IMF gold selling. Gold is not a buy at
present-day levels.
And
after that solo, the time has come to tell paid subscribers what is
new with our companies. Stockpicking is what I do best as one of our
bits of news for today will prove yet again. It also proves yet again
that our paid subscribers are the best sources out there. Not one but
two readers shared their professional expertise on this stock Thanks
to this share, in which I hold a hefty position, I may be back at the
high water line again.
Today we have a big sell.
With
the operators of Exchange-Traded Funds now about to launch foreign
country sector funds, I argue that the case for picking individual
stocks is stronger than ever. What is the point of buying an index of
Brazilian iron ore companies rather than a single company which
dominates that sector? Or an index of Middle Eastern biotech and
pharma stocks when you need only buy one share.
Send Some Spook this Halloween with Free Ecards
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