Best of the Week
Most Popular
1. Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - Nadeem_Walayat
2.Gold Price Focusing on May Cycle Bottom - Jim_Curry
3.Silver, silver, and silver! There’s More Than Silver, People! - P_Radomski_CFA
4.Is the Malaysian Economy a Potemkin Village - Sam_Chee_Kong
5.Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - Troy_Bombardia
6.A Big Stock Market Shock is About to Start - Martin C
7.A Long Term Gold Very Unpopular View - Rambus_Chartology
8.Stock Market “Sell in May and go away” Study When Stocks Are Down YTD - Troy_Bombardia
9.Global Currency RESET Challenge: Ultimate Twist - Jim_Willie_CB
10.The Coming Silver Supply Crunch Is Worse Than You Know - Jeff Clark
Last 7 days
More Clarity for the Short Term for Bitcoin Price - 22nd May 18
Study: A Rising and Strong U.S. Dollar Isn’t Consistently Bearish for the Stock Market - 22nd May 18
Gold, Silver & US Dollar Updates with Review of Latest COTS - 22nd May 18
Upside DOW Stock Market Breakout May Be Just the Beginning - 22nd May 18
5 Reasons Why Forex Trading Is Becoming Such A Big Deal In SA - 22nd May 18
Fibonacci And Elliot Wave Predict Stock Market Breakout Highs - 21st May 18
Stock Market Ideal Cycle Low Near - 21st May 18
5 Effects Of Currency Fluctuations On The Economy - 21st May 18
Financial Conditions are Still too Easy for the Stocks Bull Market to End - 21st May 18
US Stock Market Elliott Wave Predictions for 2018 and Beyond - 20th May 18
Are You Still Fearful of Cryptos? - 20th May 18
US Stocks - Why I am Short-term Bearish, Medium-term Bullish - 20th May 18
Looking for a Turn in Gold Price - 20th May 18
GDX Gold Mining Stock Fundamentals 2018 - 19th May 18
Semiconductor Stock Market Canaries: Chirp, Warble… Soon a Croak and Silence? - 19th May 18
Three Drivers of Gold Price - 18th May 18
Gold Market in First Tertile of 2018 - 18th May 18
What Happens Next When Small Cap (Russell) Leads the Stock Market - 17th May 18
Negative Signs for EUR/USD? AUD/USD - Battle - 17th May 18
DOW Jones and CRUDE Oil on a Cliff Edge, Waiting for a Nudge! - 17th May 18
Gold Price No More Subtleness – It’s Show Time! - 17th May 18
VIX Cycles Point to Stock Market Correction - 17th May 18
Trump Sounds End Times Armageddon Trumpet for Jerusalem, Israel Evangelical Prophecies - 16th May 18
Our Next Stock Market Dow Fibonacci Price Targets – Get Ready! - 16th May 18
The Coming Copper Crunch - 16th May 18
Stock Futures Are on a Sell Signal - 16th May 18
What to do When the IRS Comes for Your Property - 16th May 18
IS BITCOIN ANONYMOUS? - 16th May 18

Market Oracle FREE Newsletter

Trading Lessons

Boost Your Portfolio by Investing in Emerging Markets

Portfolio / Emerging Markets May 20, 2009 - 08:19 AM GMT

By: Uncommon_Wisdom

Portfolio

Best Financial Markets Analysis ArticleTony Sagami writes: The Dow Jones Industrial Average suffered a 3.5 percent loss last week. One of the main culprits was a report from the Department of Commerce that retail sales dropped by 0.4 percent in April.

That was on the heels of a 1.3 percent drop in March. And back-to-back quarterly declines in the last half of 2008.


That’s what happens when people lose their jobs or are afraid of losing them. Last week, 637,000 Americans filed for unemployment insurance.

Will things get worse? Ab-so-freaking-lutely!

arrow outline Add Foreign Spice To Your Portfolio Those jobless numbers are going to get even worse. Chrysler’s bankruptcy filing last week and General Motors’ plans to close 1,900 of its dealerships guarantees it.

arrow outline Add Foreign Spice To Your Portfolio The trouble isn’t limited to just the auto industry either. Production at U.S. factories, mines and utilities dropped by 0.5 percent in April, the sixth month in a row of falling output.

arrow outline Add Foreign Spice To Your Portfolio Americans are so worried now that they are doing something they haven’t done in years — saving! America’s savings rate increased to 4.2 percent in March.

arrow outline Add Foreign Spice To Your PortfolioAmerican Express (AXP), Wells Fargo (WFC), Citigroup (C), and Bank of America (BAC) all reported credit card default rates above 10 percent.

I don’t intend to sound like a total downer. Believe me, I would love to tell you that things are great and are going to get better … but I can’t do that for the U.S. market today.

I can, however, give you a very positive picture about other parts of the world.

Life is Good #1: China

Let’s take retail sales for example. Instead of steadily shrinking like the United States, retail sales in China are booming. Sales for the first three months of 2009 were up 15 percent from the same period a year ago, but were actually up 15.9 percent if adjusted for lower prices.

The demand for food, clothing, autos and home decoration materials were the strongest. Chinese auto sales skyrocketed by a 37 percent year-on-year increase in April to 830,000 cars.

“That the economic data for April and the data for the first quarter creates a whole picture together indicating that positive changes have occurred in the economic operations of China,” said Ma Jiantang of the National Bureau of Statistics.

Life is Good #2: India

India's steel consumption is on the rise, and auto sales are expected to jump up to 5 percent this year.
India’s steel consumption is on the rise, and auto sales are expected to jump up to 5 percent this year.

The Indian stock market rose for the 10th week in a row, and its economy is expected to grow by 6 percent in 2009. That’s below the breakneck pace India previously enjoyed, but could you imagine the cartwheels that Obama and Bernanke would be doing if the United States were growing at a 6 percent rate?

The World Steel Association expects India to be one of the few countries where steel consumption is expected to rise, and the Society of Indian Automobile Manufacturers expects auto sales to rise by 3 percent to 5 percent this year.

Life is Good #3: Taiwan

Chen Tain-jy, chairman of Taiwan’s Council for Economic Planning and Development, proclaimed last week that, “the worst stage is undoubtedly over and Taiwan’s economy is likely to gradually pick up in the fourth quarter.”

Why so optimistic? The political, transportation, and economic barriers between China and Taiwan are quickly crumbling, and Taiwan is enjoying a resurgence in new business from its Chinese neighbors.

Ties between Taiwan and China have been tense for decades, but for the first time since 1999, officials from the two countries met, agreed to host permanent representative offices in each other’s country, and agreed to boost transport and tourism links.

Life is Good #4: Brazil

Brazil's stock market has soared more than 75 percent since October.
Brazil’s stock market has soared more than 75 percent since October.

The Bovespa, Brazil’s primary stock market index, has jumped by more than 75 percent from its low point last October thanks to aggressive interest rate cuts from the Brazilian Central Bank.

Unlike our Fed, which has already shot all its monetary bullets by lowering interest rates to essentially zero, the Brazilian Central Bank recently cut its key rate to 10.25 percent. That may sound high, but it is an all-time low.

More importantly, it leaves lots of room for even more stimulus.

As you can see, some parts of the world are dancing to a different economic drummer. Sure, we live in a global economy, but the countries that are rich in natural resources … that aren’t spending beyond their means … that enjoy trade surpluses and have large war chests of foreign reserves have been able to avoid the financial plague that is killing the U.S. economy.

Look, your investment feet are not stuck in U.S. cement. Nobody is forcing you to keep your money in U.S. stocks. What you should be doing with your portfolio is avoiding/underweighting the countries with slumping economies and loading up on the countries with positive economic prospects.

The four countries above are a great place to start your investigation, but make no mistake … doing nothing is the worst mistake you can make this year.

Add a little foreign spice to your portfolio — especially from Asia — and I believe you will be very happy with the results.

Regards,

Tony

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.

Uncommon Wisdom Archive

© 2005-2018 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