Read Michael Moe's report on the booming Gulf area, "Sandcastles in the Sky," the first eight pages of his his regular report ThinkThoughts.  Then take a look at T. Rowe Price Africa & Middle East fund TRAMX. I need say no more...

http://www.thinkthoughts.net/issues/ttcurrent.pdf

By the way, it was announced yesterday that French construction conglomerate Vinci had  signed a $3 billion contract to build the world's longest bridge, a 40-kilometer span from Qatar to Bahrain. 

Jagor 

 

Yup -- this is also why Powershares has already filed for an Africa & Middle East ETF.

WisdomTree also just filed for a Middle East Dividend ETF ---  The countries to be covered by the fund include Bahrain, Dubai, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar and the United Arab Emirates.

Also -- this 2008 report just released in May by Deutsche Bank on Alternative Investments in the Hedge Fund Industry has the Middle East & North Africa as potentially the best performers (at least in the short-term outlook) -- see page 7 in the report.

http://www.deutsche-bank.de/presse/en/download/2008_Alternative_Investment_Survey.pdf

 

 

Thanks, Kenster, for the additional information. This suggests that the next global investing hotspot will be the Middle East and Gulf region.

Additionally, on page 37 of the Deutche Bank report, it states: "The Middle East/North Africa is a new listing on the survey for 2008 and the predicted top performer
amongst all regions. If a firm has exposure, it is not planning to reduce it, and nearly a third of investors plan to increase their exposure." 

TRAMX is up +8.84% YTD which is 12.43% better than Morningstar's diversified emerging-market category average.

What are you wating for, guys, an engraved invitation?  But, as usual, don't put all your eggs in one basket.

Jagor 

I found this fund last fall, but missed the initial roll out, boo...

looking at the advise on this board, and what portfolio's people have listed/ recommended, exposure to large areas of growth is missing.

I'd rather have some exposure in each of the growth areas instead of one of the diversified 'one stop shopping' style funds. 

I strongly agree, look for targeted funds, and spread your wealth outside the US.  Just don't put it all in one spot. use a dozen spots to put a dozen eggs,  it is safer.

You guys have got to be kidding.  Dubai has bubble written all over it.  It's more like "pie in the sky."  They're selling off tiny parcels of desert for millions of dollars to speculators who have no intention of actually inhabiting the plots. 

Incidentally, construction of the world's tallest building is often an indicator that things have gone crazy in a society - too much money being thrown around at economically unsound projects.  You'll recall that 40 Wall Street, the Chrysler Building, and the Empire State Building were all commissioned right at the tail end of the roaring 1920s.  That didn't turn out too well - the Empire State Building was largely empty during the Great Depression and unprofitable until the 1950s.  The Petronas Towers in Malaysia didn't fare too well either.  They were completed in 1998, just in time for the Asian Financial Crisis. 

As for TRAMX, it's predominantly exposed to financial institutions in the Middle East.  These are the institutions that are underwriting all this crazy speculation.  e.g. Top holding: Emaar Properties PJSC.  This is a firm that, because of insane property valuations in Dubai, is going to become "one of the world's most valuable companies by 2010."  They used to say that about all the banks in Tokyo that held Japanese land on their books - before the bubble burst and land collapsed by more than 50%. 

After seeing what's happened to the US financial system over the past year, why anybody would want to go off and speculate on banks in the Middle East is way beyond me.  Speculating on bubbles is not investment.  It's gambling. 

Best,
Oildog

Oildog,

With all due respect, I specifically wrote in my post, "Don't put all your eggs in one basket," and I was going to add the standard caveat, "Past performance does not guarantee future results." 

I am retired and almost 50% of my portfolio is in bond funds, but there is no reason whatsoever that investors--even retirees like me--shouldn't put a little mad money in a fund such as TRAMX. 

Furthermore, I worked in the Gulf area for almost eight years and possess some first-hand, on-the-spot knowledge of the region.  Certainly with crude oil fetching $120 a barrel, the Gulf countries are experiencing a boom.  And yes, it is true that one of these days the bubble will burst--although maybe it won't be until oil reaches $200 a barrel.  But you know what to do when the bubble bursts? Just sell your shares in TRAMX and collect your profits as you would with any other investment.

Jagor 

Oh I also will not jump on a Middle East Fund. 

If I had to pick one Country/Region to invest in based on their Energy/Natural Resource abundance then I would pick the safer Canada option. 

It's just interesting data to see where investors out there think things are headed---I do try to stick to a more diversified global theme. 

Both T. Rowe Price EM and Global Fund have some exposure to the Middle East / Africa region and so that should do the trick for most people.   

As of 3/31/08 --- % of Fund in Middle East & Africa

TRP EM Fund: 15.8%
TRP Global Fund: 3.8%

 

I'll admit that the Dubai skyscraper binge is a concern. I wonder about the long-term sustainability of the Gulf cities in the desert.

But for now I think it's one of the best investments to be found.  I'm hugging TRAMX and its collection of Islamic Banks.  Why?  No subprime!  I bought TRAMX early on and watched it soar while every other finance-heavy fund on the planet crashed last year.

Clearly the regional boom is linked to energy prices - but until someone invents a "Mr. Fusion" device to power our cars, I doubt that oil will fall below $100.  So, I follow the money.  (OK, I've only got 4% in TRAMX.)

A true classic bubble has crazy valuations, but TRAMX has some of the best valuations out there.   Compared to the S&P it's cheap.  The profits and growth are real.

At least as long as there are happy customers willing to pay through the nose for oil & gas.   (Thougth the ride might get bumpy if things heat up accross the Gulf.)
 

I am retired and almost 50% of my portfolio is in bond funds, but there is no reason whatsoever that investors--even retirees like me--shouldn't put a little mad money in a fund such as TRAMX. 

If you're talking about mad money, sure.  But there's no reason you wouldn't put mad money in lotto tickets either.  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.  That's a recipe for losing money.

But you know what to do when the bubble bursts? Just sell your shares in TRAMX and collect your profits as you would with any other investment.

Things don't work that way.  If it were so easy, there would be thousands of aggressive growth funds that zoomed during the tech bubble and didn't lose anything afterwards.  A bursting bubble is only obvious after it has thoroughly deflated.  By the time you get around to selling TRAMX, there likely won't be a lot of profits left to collect.

Best,
Oildog

 

 

Oildog,

Wise words, as usual [I read many of your posts], but I still beg to disagree.

In your previous post you wrote “Speculating on bubbles is not investment.  It's gambling.”  I would appreciate knowing which investments—aside from Treasurys and CD’s, which are insured 100% by the government—are not “gambling.”  

In fact, as every investor knows—or should know—every investment is a gamble, based on the investor’s own due diligence and analysis of risk and reward.  A lot of smart people, including the editors of Fortune and CFO Magazine, certainly did not consider Enron to be a “gamble.”  Likewise, a lot of people, including most notably Jim Cramer, did not consider Bear Stearns, the fifth-largest investment bank in New York, to be a “gamble” on Friday, March 14, 2008. Like Enron, it subsequently--and rapidly--lost 99% of its value.  As they say in the Gulf, “Only God knows the future.”  And God was certainly not talking to Jim Cramer.

With respect to your comment the posts on this thread are "hyping developments in the region and emphasizing recent performance."  Well, the inception date of TRAMX is September 4, 2007, so how can we comment on anything other than its "recent performance?" 

And why shouldn't potential investors inform themselves about current economic developments in the Gulf--even though they may appear to be "hype" to some people?

Jagor 

Before buying TRAMX last year I spent a day studying every holding. We can find the complete portfolio for each quarter via a link on this page HERE.  I concluded that manager Chris Alderson knows what he's doing. 

I also consulted the COFACE (French business risk insurer) country ratings (click HERE), and have my personal M.E. & Africa travel and work experience, FWIW.

I'm sure that Alderson is watching the Dubai skyscraper phenomenon as closely as anyone.   Alderson is arguably the most successful and experienced EM fund manager I know.  He's running an actively-managed fund with a wide geographic mandate; not a blind, market-cap based index.

IMHO, the bigger challenge is successful Africa - not Gulf - investing.  For example, you don't dare ship product to Nigeria without full payment in advance. 

Furthermore, the stocks do not appear overbought.  TRAMX is one of the only vehicles I know of to invest in the M.E. and Africa.  This bears no resemblance to the tech bubble with its hundreds of tech funds buying companies yet to produce a profit.

From my perspective it's the USD-denominated S&P 500 that's truly risky.  A diversified collection of global EM funds provides exposure to the real growth occurring worldwide in countries with strong balance sheets and excellent balance of payments.

I agree that TRAMX is a pseudo energy and natural resources play.  If the price of crude falls to $50 the fund will fare very poorly.   There is also a risk of regional conflict (think Iran). 

However, I consider the regional infrastructure growth to be very solid.  Look at the air traffic patterns - Dubai has one of the world's busiest airports.  Located between Europe and the Far East, it has become a prime tourist and commercial destination.

I agree on EM's In general over Gen. Int'l funds, like DODFX or the Index.( ie:  vs Shorter term play vs LT )

As for Middle East? I guess so, but I wouldn't call  TRAMX soaring just because it's gone up about +16% and it hasn't even been a yr yet..and vs it's Risks? I think it should be +32% by now

Alittle can go a long way? Sure, dump $10k just to get in on some Action..( and a ETF might be a safer bet, since you can bail on it right away vs MF when It's crazy developments Fall into the Ocean )

But, In this Area( ME) if the US Fleet  bails out and maybe even if we Bail Out of Iraq , things can get very dicey..

And We should be being paid $1 Billion a Month by Dubai to protect their butts, like so many other countries that are taking advantage of our protecting them for Nothing ( but getting it stuck in our Rears with Higher price oil )

I look for the day the US can say goodbye to their OIL and let them go stick it to the likes of China..and let them try to get China to protect them..

With Replica ships...
LOL

In Lieu of Energy funds? SSGRX and Some of the Top stocks in my funds (on margin) have done very well for me over the yrs ( PWE,XTO,POT & FST ) and they will tell me when to bail as well.

He who takes no chance, has no chance..

 

How Arab Economies Cope With Globalization

Knowledge @Wharton

At the beginning of 2008, crude prices are at record highs, creating immense wealth for oil-exporting nations in the Middle East. Yet the Arab economies also face what economists call "a demographic bulge of a fast-growing labor force" -- and the challenge of creating enough jobs for the population. This is happening at a time when the arrival of China and India is raising the competitive stakes for other emerging economies that want to make their mark on the global economic stage. How are the Arab economies dealing with these challenges?

Howard Pack, a professor of business and public policy at Wharton, and Marcus Noland, a senior fellow at the Peterson Institute for International Economics, address these issues in a book titled, The Arab Economies in a Changing World. Knowledge@Wharton recently spoke with Pack about his book. An edited transcript of the conversation follows.

http://www.thestreet.com/print/story/10399255.html

 

Earlier this week in an interview posted on Bloomberg.com, Mark Mobius, head of emerging markets for Franklin-Templeton, spoke of his plans to invest in the Middle East, Africa, and other "frontier" markets. This is one indication of where capital is going to flow. T. Rowe Price through TRAMX has already done its due diligence and established an investment base in the Middle East and Africa. TRAMX manager Christopher Alderson is based in London, as I recall, and this gives him a different perspective than U.S.-based managers. I think he has assembled a promising portfolio of Middle Eastern banks, real-estate developers, basic industries (cement, cable, etc.), and telecoms, as well as African platinum miners and telecoms including MTN Group (reportedly in buy-out talks with India's Bharti Airtel). Are there risks? Sure! But if you want to see the results of risk-taking, look at the 52-week returns of AIG, Ambac, Citigroup, Countrywide, MBIA, Wachovia, etc. Persian Gulf nations have benefitted from the one-way flow of U.S. petrodollars into their economies. TRAMX provides me with one way to recover some of my petrodollars (maybe petroeuros in Norbert's case) and offset a portion of the costs I am paying for gasoline. P.S. Year-to-date returns through May 9 per Briefing.com: DJIA -3.9%, Nasdaq -7.8%, S&P 500 -5.5%, Russell 2000 -6%, TRAMX +9%.

In your previous post you wrote “Speculating on bubbles is not investment.  It's gambling.”  I would appreciate knowing which investments—aside from Treasurys and CD’s, which are insured 100% by the government—are not “gambling.” 

IMO, the difference comes down to expected long-term returns.  If an investment has positive expected returns, you'll come out ahead as long as you're sufficiently diversified.  On the other hand, if an investment does not have positive expected returns, you're basically gambling on the possibility that the market will continue or extend its stupidity.

In general, I try to avoid economic bubbles because I don't believe bubbles have positive expected returns.  That's why I wrote a bunch of posts saying people should avoid real estate and REIT exposure a few years ago.  You can see some of the posts here:

link

I also wrote about the Saudi and Vietnam stock market bubbles before they burst - I also asked the technical analysis folks on the Fidelity forum whether they thought the bubble was about to deflate, but they got the Saudi case wrong and had nothing to say about the Vietnam market (one reason why I'm skeptical about T/A - if you can't identify bubbles, the king of short-term gyrations, why should we believe that your analysis is useful for anything else?).

link

Anyway, I'm just making calls based on the underlying story.  Anytime people on the ground start doing stupid things with their money based on the belief some kind of unsustainable the party is going to continue, that signals danger to me.  There's a common psychology behind bubbles. 

I certainly see elements of that in the UAE today.  Are valuations reasonable?  Again, take a look at Emaar Properties PJSC.  The price/book ratio is about 2.0.  That's richer than Berkshire Hathaway, but certainly not crazy.  However, once you start considering that much of the book value comes from real estate holdings in bubbly markets like the UAE, the valuation becomes a lot more suspect.  These are over-hyped properties in the middle of the desert. 

Could things get more crazy before the bubble bursts?  Certainly.  The whole point is that bubbles are impossible to time.  However, you will generally lose nothing by avoiding them. 

Best,
Oildog

As a supporter of tramx, did I buy into the fund as a buy and hold?  NO, 

Will I time things right to get out at the top? NO. 

Will I take a small position of 5-10 % and ride the wave over the next couple yrs? YES. 

Will I watch for troubling signs and pull out? YES.

Is it on the same cycle as my other holdings? NO.

Am I in other funds that have a larger gyration? YES,  uupix.

By being in many intl funds that have outperformed the US do I feel safer? YES, over the past 2-3 yrs (lets say 1000 days) the number of days I had that all my funds lost for the day is less than 25 times.

Follow the money, watch the markets, spread across many markets, avoid the markets that are flat for periods of time.

over the past 2-3 yrs (lets say 1000 days) the number of days I had that all my funds lost for the day is less than 25 times.

That's a pointless metric.  You could reduce the number to zero days by having both VFINX and and RYURX.  Daily returns are almost completely random.  My advice would be to ignore daily returns.  Correlations are only meaningful over much longer time periods.  

Best,
Oildog

[quote user="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.  ......

[/quote]

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.

[quote user="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. 

[/quote]

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 

Norbert,

I'm interested in what tools you are using, can you point me to some other posts?

What funds are in vietnam, I want to follow some funds but couldn't find any.  I did find a neat comparison of etf's on a global scale..  not sure what to make of it yet.

like you I've been happy with Tramx.  the other check I do is to do a stock analysis on the funds to see how much overlap there is in the fund vs my portfolio...

looking for the ziggs..

 

[quote user="norbertc"]

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.   

[/quote]

Amen to that, Norbert!  Well said and I agree wholeheartedly!

More right or more wrong, its always nice to hear opposing viewpoints.  Really makes one think and consider things rather than just try to jump on a gravy train without a clue.

I wonder if atleast one person lurking here pulled the trigger (for the wrong reason) due to the first few luring positive posts prior to Oildogs reply.  Perhaps the first few posts are spot on, but its nice to hear the other side to keep ourselves in check and really understand why we may want to be buying a particular investment.

Great discussion and very educational, as always!

Thanks to all.

Brian

 

Lots of good responses... I'll respond to the ones where I have comments. 

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

It depends on the fundamentals.  I think most would agree that 1929 in the US was a bubble.  That level was hit again in 1954, which is about 25 years.  It would have been a lot faster if the world economy hadn't gone into a depression in the 1930s.  Similar story with the Nikkei - it wouldn't be underwater 20 years later if the Japanese economy had been less anemic in the 1990s.  What happens after a bubble is going to be affected by a bunch of factors that have nothing to do with markets.  Will there be a massive uprising and total chaos in China?  Will Vietnam go to war with China?  If nothing goes wrong and China and Vietnam continue to hum along, sure, their markets will recover before long.  But even current valuations are predicated on very rapid growth in earnings that may or may not materialize.   

T/A is just a tool, not a silver bullet.

My primary issue with T/A is that I have yet to see a convincing study that shows it actually works.  The "intro to T/A" books I've seen provide no evidence that any of the strategies have any predictive power.  I also don't know of any billionaires who got there primarily using T/A. 

Best,
Oildog 

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

I'm not sure why you think this is impossible.  I'm actually surprised that you've been investing that long without figuring out your actual returns. 

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.

Unfortunately, this is a terrible indicator for how well your investments have done.  The twenty years from 1988-2008 were an unusually good time to be investing in equities.  You would have done about 11% per year by just being in an S&P 500 index fund - more if you diversified into things like international, small-caps, or value-stocks.  That would have grown your initial investment by about 8 times.  Even if you had performed pretty badly and made 8% per year, you would have grown your initial investment by 5 times.  The fact that you're well off only indicates that you didn't dramatically underperform. 

Best,
Oildog

It's true that China and India valuations are still on the high side.  There are clearly multiple challenges in the region:  inflationary food & energy costs, sharpening contrasts between rich and poor, environmental damage, political heavy-handedness, financial market immaturity, etc.

But there are risks everywhere I look - not least at home in terms of energy balances, an overblown finance sector, and a sharply-divided electorate. Politics and fear seem to dominate, instead of a spirit of compromise and working together.  Europe has to deal with an overvalued currency now - it's killing the profits of companies like Airbus.

On Asia, I only invest with Matthews and have some degree of confidence in their ability to traverse the minefield that those markets represent.  MAPIX and MACSX (closed) are the most conservative choices I know.  This is not a region for buying a market-cap based index IMHO.  Personally, I think the strengths outweigh the weaknesses and so I'm invested there - as in every major emerging market - but particularly in top US and foreign companies that provide goods and services to support the amazing EM growth story.  My judgment is that the story is for real - not a bubble.

---

On T/A, I think it's a bit like the endless debate on the Vanguard Diehards forum.  The Diehards point out studies proving that 80% of active funds fail to beat their index benchmarks. They furthermore argue that it's not possible to pick which 20% will outperform in advance.   Ergo, you can't time the market and should just buy an index whenever possible.  (If you believe this nonsense viewpoint, stop reading now LOL).

I'd say that 80% of so-called T/A is garbage.  I use the TradeStation trading platform and spent about two months a while ago programatically backtesting various popular indicators and simple strategies.  None of them work.  So, it doesn't surprise me that there are no convincing studies.

Besides, if there were a silver bullet, the market would see it and everyone would be on the same side of the trade.  So, it's impossible. Nothing that is easy or obvious can work.

T/A an art, not a science.  I invest based on fundamentals, but T/A has been extremely helpful to me personally for maintaining discipline on buying & selling - not chasing price or selling temporary weakness.  For example:

• There are quantitative tools to implement Buffett's "Buy when others are fearful!" dictum - to see if fear levels are truly high enough to be considered unreasonable. Using them instead of emotions can only help.
  

• The London Business School has proven that a certain momentum strategy used in place of a buy-and-hold strategy would have outperformed 4-to-1 during the 20th Century.  But this is really just the same as buying strong fundamentals, just with some math to simplify things.
  

• A relative comparison of sector & region price behavior at key support and resistance levels gives valuable clues on what is truly strong and what is weak.  I like to invest in strength and avoid weakness.  US financials broke key support levels days before the major indexes last July ... so I do charting to help spot the anomalies.
  

• Parabolic upward moves are always cause for vigilance and an argument for profit taking.  Recent examples are the Feb 2007 REIT top and the Fall 2007 China top.  It's just common sense ("Sell when others are greedy"), but with some methodology thrown in.

FWIW,

Norbert

Norbert,

I agree with comments on china and the 'risk' here within USA..    We are suppose to have all the controls to keep shady investing in check..LOL..

There seems to be an opinion that china is over heated..  My view is that it is a growth engine that can be turned off easily, they will keep the engine going, change the rules, and think contrary to our view..  They have a longer term view, as such short term issues will be managed.

India seems to be stuck,  wants to beat china but lacks the industrial base for growth,  again will create a new model to promote a unique strategy to advance.

Right now I'm seeing some positive growth in russia.  The news is good and resources are not limiting the internal growth.  I think russia may be the place that is safer this year for new monies.  Opinions?

 kerryvan

Did you know that stock market performance is negatively correlated to economic growth?  If managers and other insiders can loot the company and dilute the shares, then shareholders get nothing.  And there's plenty of dirty dealings going on in Russia and China.

Dao