Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Tipping the Investment Odds in Your Favor

Stock-Markets / Investing May 15, 2007 - 02:00 AM GMT

By: Money_and_Markets

Stock-Markets

Mike Larson writes : By the time you read this, I'll be on my way to the airport. My destination: Las Vegas, where I'll be attending The Money Show. I'm looking forward to meeting many of our subscribers in person and talking to other investment professionals.

But it won't be all business. I'm going a few days early so I can meet up with an old friend and enjoy some of the city's top-notch restaurants, nightlife, and of course, its casinos.


When it comes to casinos, I approach 'em differently than most people. Rather than just throwing away money on long-shots, I like to stick to blackjack.

Why? For one thing, it's fun. For another, it's pretty much the best game the house has to offer — it gives you the best odds.

If you follow what's called "basic strategy" — playing your cards and betting based on a predetermined system — you can narrow the house advantage to less than 1%. Put another way, the odds are almost 50-50 that you'll make money. That beats the pants off of most slot machines and other table games like roulette!

Now, gambling and investing aren't the same thing. However, when it comes to investing, you can also increase your chances of winning. Today, I'd like to tell you how …

Investing in Foreign Markets Gives You a Clear House Advantage!

In my opinion, if you focus your attention on markets where the fundamental outlook is the best, you're greatly increasing your chances of walking away with a profit. I'd say you can do much better than 50-50. And right now, the strongest fundamentals can be found in international markets …

1. Foreign economies are vastly outperforming that of the U.S. The U.S. economy expanded at an annualized pace of 1.3% in the first quarter of this year. That's a lousy number … almost half the pace of a quarter earlier … and the slowest in four years.

Measured from a year ago, U.S. Gross Domestic Product climbed a bit faster — 2.1%. But that's still pretty pathetic. It's less than other major industrialized economies that have already reported first-quarter figures, like the U.K. (2.8%). It's much lower than we're seeing in smaller Asian economies, like Singapore (6%). And it pales in comparison to the whopping 11.1% growth in China.

2. Foreign housing markets aren't suffering like ours. Falling home sales and slumping home prices are acting like a lead anchor for the U.S. economy. Even the perennially optimistic National Association of Realtors now expects median prices to drop 1% in 2007. That would be the first full-year decline the group has seen since it started tracking the numbers in 1968.

Meanwhile, conditions couldn't be more different in many foreign countries. Their markets are booming:

  • U.K. home prices rose at a 6.8% annual rate in April, the fastest in four years.
  • New Zealand's home sales surged 9.5% from a year earlier in March, while median prices jumped 14% to a record.
  • In Beijing, the heart of China, prices are up 9.9%.
  • In Canada, new homes cost 10% more in February than they did a year earlier.

3. Foreign currencies are trouncing the dollar. I've said it before, but it bears repeating — the dollar has been on a slippery slope for the past several years. At the same time, foreign currencies have been rising steadily.

When you invest in countries with falling currencies, it's like flying into a headwind. When you invest in countries with rising currencies, it's like flying with a powerful tailwind.

You benefit from the favorable currency translations. The value of your foreign shares and bonds increases in dollar terms as the greenback declines. Plus, international investors are attracted to countries with rising currencies like moths to a flame. Their buying helps drive the value of your holdings higher.

Bottom line: If you're looking for capital gains, there are plenty of high-flying foreign stocks. Or if you're looking for income, you can invest in short-term foreign debt or more conservative, higher-yielding, foreign companies in stable businesses.

But Don't Forget the Risks Involved! Here Are Three Rules to Follow …

Again, investing is not the same thing as gambling. But I think some of the same principles that apply to gaming apply to the markets, especially when it comes to limiting your risk.

First, you shouldn't put all your chips down on one bet. You wouldn't walk into a casino with $1,000 and put it all on "red" at the roulette wheel, right? Well, by the same token, you shouldn't put all your money in one investment or category of investments, either.

As much as I believe the dollar will continue to fall, I don't think it makes sense to put 100% of your money into contra-dollar positions. Reason: A surprise rally in the greenback, however unlikely, could really wreak havoc on that kind of portfolio.

Make sure you don't have all your money exposed to any one foreign market, any one foreign stock, or any one foreign currency. Instead, spread your investments around.

Second, bet with your head, not over it! You don't go to Vegas and put your mortgage money down on the blackjack felt. You play with money you can afford to lose if things move against you.

Similarly, the money you need to live on … that you can't afford to risk under any circumstances … should remain in the safest possible investments. Martin and I like Treasury-only money funds such as American Century Capital Preservation Fund (CPFXX) and the Weiss Treasury Only Money Market Fund (WEOXX). The latter is managed by Weiss Research's separate affiliate, Weiss Capital Management.

Alternatively, you can consider some of the exchange-traded funds that hold short-term Treasuries. They include the iShares Lehman Short Treasury Bond Fund (SHV) and iShares Lehman 1-3 Year Treasury Bond Fund (SHY).

Third, know when to walk away. Sometimes the cards go cold, and your luck runs out. That's when you have to just walk away … hit the buffet, catch a show, whatever.

The same thing goes for investing. If the fundamentals take a turn for the worse … the charts start breaking down … or any other major shift takes place, you don't want to just dig in your heels. You should accept that circumstances have changed and move on, even if it means taking a loss.

Keep these principles in mind, and your portfolio will thank you. And I'll do my best to follow these same rules while I'm in Vegas!

Until next time,

By Mike Larson

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.MoneyandMarkets.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules