oildog:

.......  I'd certainly agree that there are sensible reasons why one might pursue international diversification in a niche region like Africa/Middle East.  However, the posts in this thread lean much more towards hyping developments in the region and emphasizing recent performance.  ......

Hi Oildog,

Could you please offer your opinion and state some examples of why it would be sensible to invest in this fund.

Thanks, just trying to learn.

Best Regards,

Brian

It might make sense to seek diversification in a niche region like Africa/Middle East if stocks in the region are uncorrelated with the rest of the world and other asset classes.  The idea is to collect a basket of assets that move differently with respect to each other - this should lower your overall portfolio volatility. 

This is a major reason why stocks and bonds go together so well - when stocks are doing poorly, bonds tend to be doing well, and vice versa.  

Best,
Oildog

I think this fund might be best suited for aggressive investors, and by that I mean individuals who are going to do their own due diligence and watch their own back, not just those who want to take on more "risk".  For example, I think Norbert will be fine holding this fund, but for the average investor I think it is playing with fire. 

The fact that a bunch of other funds are being rolled out to invest in this region is a danger sign, in my opinion.  Also, while I'm sure Dr. Moebius is a smart man, it should be noted that his funds have barely outperformed the relevant index during the last 10 years, and he has not stacked up that well against the category average.  I'm not sure his actions should be viewed as an affirmative signal, or rather a negative one. 

The biggest concern is that the ME region may continue going up precisely because everyone is piling into that region currently.  That would mean you'd see gains for a while, but you'd have to be very careful not to get stuck holding the bag in the end.  Overall that is not a good omen for a long term investment.   

I agree with the last two posts.

Nagorak:

I think this fund might be best suited for aggressive investors, and by that I mean individuals who are going to do their own due diligence and watch their own back, not just those who want to take on more "risk".  For example, I think Norbert will be fine holding this fund, but for the average investor I think it is playing with fire. 

Maybe we should differentiate the agressive investor that is doing the due diligence and the most common investor that does a buy and hold.

Should we have a agressive investor/ momentium discussion forum?

I get fustrated explaining various approaches to actively manage my portfolio and obtaining results better than the buy and hold methodology that most people use.  I think I reducing overall risk and have good upside potential.

I get fustrated explaining various approaches to actively manage my portfolio and obtaining results better than the buy and hold methodology that most people use.  I think I reducing overall risk and have good upside potential.

Have you actually calculated your internal rate of return for the past twenty years and compared to the relevant index over time?  There's a known bias for investors to have a vastly inflated sense of their own past results.  It's similar to how gamblers talk about their big wins but not their mundane (and much more common) losses. 

I think your perception of this board, as well as the vast majority of investors, is incorrect - a big majority of posters essentially do what you're doing - look up recent mutual fund performance figures and jump onto whatever is doing well.  The reason why I always counter such strategies is because the evidence that they work is very weak.  Studies that have actually analyzed the returns accruing to individual investors who move in and out of funds shows they underperform the market.  Just looking through the archives in this forum will give you plenty of reasons to be suspect - funds often become massively popular right before they crash and burn. 

The actual number of buy & hold investors on this forum can probably be counted on one hand.   

Best,
Oildog

To your point:

 Dalbar Study:

1984-2002

S&P 500 Return: 12.22%

Avg. Mutual Fund Investors Return: 2.57%

(avg. mutual fund return was roughly in line with the S&P)

I appreciate hearing your concerns about investing in the M.E. and Africa.  It's a lot healthier than just reading bullish "I'm buying more!" posts concerning TRAMX.  It causes me to take a second look at what I'd doing.  That's why I value these forums. 

By the way, Chang is relocating to Dubai.  So, we'll have a man on the ground there.  He can watch the new skyscrapers go up.

On T/A and bubbles, I think there's an important difference between a bubble and an overbought condition. 

Tulips, Japan in the 1980s, and Tech in the 1990s were true bubbles.  We saw absurd valuations and prices that we will likely never see again in our lifetimes.

Shanghai and Viet Nam last year are more difficult.   Those markets were obviously overbought with PEs around 60 or so, but I expect them to continue strong over time.  They might not make new highs for a while, but I think we'll see it happen.  So, not really a bubble IMHO.

On TRAMX, at least, we can't be accused of just looking up past returns and diving in to chase them.  Together with my investing friends, I bought within a month of inception based on the fundamentals - as posted back then.  We thought it had stood a chance of "zigging" when everything else "zagged". So far it's been a good call (unlike my poorly-timed entry into renewable energy LOL).  I have not taken any profits.

T/A is just a tool, not a silver bullet.  It was very helpful calling the REITs blow-off top in Feb 2007.  Ditto the China run-up last Fall. It was also useful to pick entry points in January and March: the Vix spikes.  Obviously there are many times when it won't tell you anything more than an astrology forecast in your local newspaper.

T/A has helped me counter my emotional instinct to buy high and sell low; to instead do the opposite.  At least to that extent it's been of some value. 

So, keep challenging us.  But I'll need more than skyscrapers to sell TRAMX ... for now.

Cheers,

Norbert
 

you are right as always, I haven't done the impossible task of getting a rate of return for the past 20 yrs. 

All I've charted is quarterly 'money in the bank' so to speak.  The total of all investments that are in funds, cash, bonds. No house, cars or other toys were included.. I can safely say if I had stayed in the same funds, such as fido balanced, contra, asset manager, emerging (funds in the 401k)...  without exchanges, lets say 10% per yr. average.  With that assumption my money by itself should have doubled 3 times.

My life style has changed, more non  essentials , and bank accounts that indicate my method has worked better for me. If I didn't get good returns, I couldn't have my life today, and remain debt free.

The opinion about the investors on these forums is based on the portfolios they show, advise given, and responses to suggestions.  The investors that you are referring to seem to be missing from these discussions.  Agreed following the herd and making purchases can create careless investments.  Waiting for 10 yrs of data can create missed opportunities, such as prlax, eurox, letrx which all have 5 yr records over 40%...  If you missed those 5 yrs and had the money only getting 10 %, you missed your money doubling twice.

Investors that I know from the work place and investment seminars geared toward funds are very much of the buy and hold strategy.  Tell me why so many investors held on to magellan for the past 10-15 yrs?  The most common question at 401k meetings is 'how to judge the funds'.  That is not an active trader question.  The are not flocking to the larger gains, since most of them did not jump to emerging market funds in the 401k, too risky.  I've seen people in their 30's 50% in bonds..

If a p/e is at 60, think of how long it's going to take to get your money back, or how long it will take to beat T-bills, or how long to get a decent return.  Who is going to stick it out that long?

I'm in Shanghai, and I know an accountant who invested in the market here last year.  I can't believe he did it.  This is a market where you're safer in the short-term than in the long-term.  There is no corporate governance which means companies continually get looted, insider information and trading  is rife, and  companies' earnings are inflated by stock holdings in other companies.  I could go on and on.

I think there are a lot of bubbles out there and I'd rather stay away.  I'm thinking of shorting the Russel 2000 when I get a chance.  I almost bought junk bonds last month, I probably should have.

Dao