Emerging Market Funds a Good Buy?

Take a look at this guy's blog. He makes some good points and updates
his site regularly.

www.rationalinvesting.blogspot.com

Re: Emerging Market Funds a Good Buy?

Howdy capt,

Well, I like some of his stuff, but as with any pundit or peep with an
opinion, YOU must do your own homework and make investment decisions on
what is best for YOU.

I concur with emerging mkts as being a must investment for the near and
longer term. Sure, they're volatile and you should diversify and
minimize your risk to stay able to sleep, but a good well rounded em
fund for most and perhaps even some regional funds for some, is
warranted.

I disagree on gold and think he'll probably get handed his ass on
shorting newmont mining. If I was going to short in this area, I'd
either use Profunds new short precious metals fund or short the minors.
Newmont is the lead dog in this sector and with gold setting new 25
year highs yesterday (and the pm's shattering all vestigages of
resistance), you will probably see more and more instititutional
rotation into this sector and where will they go - the lead dog
newmont. Frankly, I see gold spiking to 600 and silver to 10 is
heartbeat.

The trends that are working (and worked last year+) are natural
resources, particularly energy services, precious metals, basic metals;
emerging mkts, particularly eastern europe, asia, korea, india, japan.
It does look like tech might be starting to move, but be careful
initially until the trend is firmly established. I have a bit in
Matthews Asian Tech MATFX and think you need to think global with a
tech buy.

Near term, things look pretty good. However, in the intermediate
midyear term, there are a LOT of icebergs out there including the fed,
iran, inflation (commodities), debt and deficit, employment issues,
etc. However, if we do see a dip, the fed may be forced to start
cutting this fall and that would be like the bloody starting gun and
the market would go absolutely nuts. So, be careful and alert for now
to possibly raise cash should things turn south, but be on the lookout
for where you want to go this fall, particularly with tech and large
cap growth.

just my humble opinion,

rono

Re: Emerging Market Funds a Good Buy?

rono wrote:

> I disagree on gold and think he'll probably get handed his ass on
> shorting newmont mining. If I was going to short in this area, I'd
> either use Profunds new short precious metals fund or short the minors.
> Newmont is the lead dog in this sector and with gold setting new 25
> year highs yesterday (and the pm's shattering all vestigages of
> resistance), you will probably see more and more instititutional
> rotation into this sector and where will they go - the lead dog
> newmont. Frankly, I see gold spiking to 600 and silver to 10 is
> heartbeat.

Be careful.

In the past, the one thing that eventually short-circuited every gold
rally was steeply rising interest rates. Look at the period 1993-94 for
example. Gold soared, Fed jacked up interest rates, gold collapsed. In
fact, some analysts had speculated that Greenspan himself used the price
of gold as an indicator of early inflation, and whether to start raising
interest rates to head off that inflation.

For the moment, I'm still bullish on gold too. But I'm watching those
interest rates carefully. We're already just into an inverted yield
curve. (Which is traditionally bad news for the broader U.S. stock market.)

If this new Fed chairman, Bernanke, proves more dovish on inflation than
Greenspan was, then gold could soar into the stratosphere, while the
dollar collapses.


> The trends that are working (and worked last year+) are natural
> resources, particularly energy services, precious metals, basic metals;
> emerging mkts, particularly eastern europe, asia, korea, india, japan.

Don't forget Russia. Russia is basically an emerging market that
incidentally has nuclear weapons, so they too profit from the world's
new hunger for natural resources and commodities.

I'm still not sure about Japan. In the past, they've had strong but
short-term bull markets that eventually fizzled, followed by severe bear
markets that wiped out all the gains. To put Japan back on course for
long-term (10-20 years) bull conditions will require a major sea-change
in Japanese policy and society. Comparable to the advent of Volcker and
Reagan, in America in 1979-80. I don't see anything like that in Japan.

To make Japan long-term bullish, you need some BIG change. Maybe like
the remilitarization of the nation.


--
Steven D. Litvintchouk
Email:

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Re: Emerging Market Funds a Good Buy?

HI Steven,

You're correct about gold in that it's always wise to keep a close
watch on speculative plays. And gold is particularly sensitive to
manipulation by the central banks. However, if they start to raise
rates to combat inflation, I don't really see that as a problem. Back
in the great bull run of the late 70's, we had astronomical rates and
it didn't hurt a bit. Also, I'm not sure that inflation will show up
with the current acctng practices of the gov't with the CPI. Too much
hedonic manipulation (50%) and housing (20%) is still benchmarked to
rental rather than owner occupied. Also, due to the internet and
globalization, we're not seeing much pricing freedom with mfg and
services. Most of the inflation that we're seeing is with commodities
and health care. These seem to balance each other out to a degree.

I've been playing easter europe with EUROX and TREMX for over a year
and doing quite well. However, Russia is absolutely a wild card and
with Iran . . . This is still a region for growth, but again, be nimble
and quick to take profits should anything untoward occur.

Japan. Well, I'm making money there and it's trending very well.
Japan and Korea and to a degree all of asia is benefacting from China.
China's such a bitch to play pure, but why when you can play it via
the rest of asia. India I am playing pure with MINDX which I bought
out of the gate in November. Geez, it's up 16.7% and that works for
me.

And I've had great luck with Matthews Asian Tech MATFX, but a recovery
in tech is still nascent, so I'm keeping my bets small until I see a
bit more trend.

take care,

rono

Re: Emerging Market Funds a Good Buy?

rono wrote:
> HI Steven,
>
> You're correct about gold in that it's always wise to keep a close
> watch on speculative plays. And gold is particularly sensitive to
> manipulation by the central banks. However, if they start to raise
> rates to combat inflation, I don't really see that as a problem. Back
> in the great bull run of the late 70's, we had astronomical rates and
> it didn't hurt a bit.

In the late 1970's, until Volcker took over, the *real* interest rate
was not "astronomical." The real cost of borrowing (taking inflation
into account) was not high, because inflation had soared to 14% annualized.

And currently, for the last couple of years, the real cost of borrowing
has been close to zero, when you subtract inflation from interest rates.


--
Steven D. Litvintchouk
Email:

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Re: Emerging Market Funds a Good Buy?

I am split on gold as Rono and Steve are. Gold has had 5 positive years
in a row. I think it is a stretch for it to make it six, but I've seen
weirder things. I really think the dollar is going to stabilize, and
perhaps rally in 2006. This would be a head wind for gold.

Good Luck to all.......

Re: Emerging Market Funds a Good Buy?

Captain_Gain <> wrote:
> I am split on gold as Rono and Steve are. Gold has had 5 positive years
> in a row. I think it is a stretch for it to make it six, but I've seen
> weirder things. I really think the dollar is going to stabilize, and
> perhaps rally in 2006. This would be a head wind for gold.

Well, the correlation between gold & the dollar was completely blown
away last year. The dollar did make some modest gains while gold
also took off like a rocket.

I'm actually looking for more foreign exposure this year because it
looks like the dollar will decline.

Why are you still bullish on the dollar?

-Sanjay

Re: Emerging Market Funds a Good Buy?

Because everyone else is bearish. That's when you buy.

Good Luck!

Re: Emerging Market Funds a Good Buy?

Captain_Gain wrote:
> Because everyone else is bearish.

If "everyone else were bearish" on the dollar, then the market wouldn't
have rallied this month. It rallied because investors were betting on
the new Fed chairman not raising interest rates much more. And rising
interest rates are the only thing that can prop up the dollar.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.