Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
SPX Wedge Breaks and Double Gaps: Capatulation but GOLD is Coiling for Breakout - 24th Mar 18
The Fed’s Interest Rate Hikes Aren’t Bearish for the Stock Market - 24th Mar 18
Will Gold Price Breakout? 3 Things to Watch… - 24th Mar 18
Gold Junior Mining Stocks GDXJ Fundamentals - 23rd Mar 18
Global Trade War Fears See Precious Metals Gain And Stocks Fall - 23rd Mar 18
Stocks Recovering from a "deep dive" Overnight - 23rd Mar 18
Blaming the Fed for Weaker Greenback US Dollar - 23rd Mar 18
Watch This Group Signal Stock Market Trend Changes - 22nd Mar 18
Stocks are Gapping Beneath the Trendline Support - 22nd Mar 18
Fed Action Casts Shadow on Bullish Case for Stocks - 22nd Mar 18
A Strong Economy and Weak Stock Market is Bullish for Stocks - 22nd Mar 18
Fed Raises US Interest Rates 25bp – Where Are We In The Stock Market Cycle? - 22nd Mar 18
Why Spotify Will Likely Surge During Its IPO - 22nd Mar 18
SY Police Arrest Woman for Blowing Trumpet at Sheffield Tree Felling Protest - 22nd Mar 18
Facebook: The Anti-Social Network Covert Data Gathering - 21st Mar 18
Additional Signs for Gold and Silver Amid Increasing FOMC Tension - 21st Mar 18
Credit Concerns In U.S. Growing As LIBOR OIS Surges to 2009 High - 21st Mar 18
Stock Markets Are Flat-to-lower Before the FOMC - 21st Mar 18
Will Powell’s Actions Pop Stock Market Perfection - 21st Mar 18
Economic Moral Hazards of the International Criminal Court - and Philippines Withdrawal - 21st Mar 18
Larry Kudlow vs. Vladimir Putin on Gold - 21st Mar 18
Trump Builds Economy and War Machine - 21st Mar 18
This Stock Market "Illusion" Can Destroy Once-Vibrant Portfolios - 21st Mar 18
Gold Short-term Pull Back in Progress - 20th Mar 18
Stocks Appear to be Under Pressure - 20th Mar 18
Time To Eliminate Your Wall Street Tax? - 20th Mar 18
The Beast from the East Snow, UK Roads Driving Car Accidents - 20th Mar 18
Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - 19th Mar 18
2018 Reversal Dates for Gold, Silver and Gold Stocks - 19th Mar 18
This Tech Breakthrough Could Save The Electric Car Market - 19th Mar 18
Stocks Set to Open Lower, Should You Buy? - 19th Mar 18
The Wealth Machine That Rising Interest Rates Create Conflict With The National Debt - 19th Mar 18
Affiliate Marketing Tips and Network Recommendations - 19th Mar 18
Do Stocks Bull Market Tops Need Breadth Divergences? - 19th Mar 18
Doritos Instant £500 Win! Why Super Market Shelves are Empty - 19th Mar 18
Bonds, Inflation & the Market Amigos - 19th Mar 18
US Housing Real Estate Market and Banking Pressures Are Building - 19th Mar 18
Stock Market Bulls Last Stand? - 18th Mar 18
Putin Flip-Flops Like A Drunken Whore On Bitcoin Cryptocurrency Legalization - 18th Mar 18
How to Legally Manipulate Interest Rates - 18th Mar 18
Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - 18th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Stock Market Investments - Take More Profits Now!

Stock-Markets / Global Financial System Aug 16, 2007 - 09:06 AM GMT

By: Money_and_Markets


Larry Edelson writes: I'm just back from Asia with visits to Thailand, Singapore, Manila and Sydney. And I'll get right to the bottom line: I have no doubt in my mind whatsoever that overseas economies will continue to explode higher.

However, my on-the-ground experience from this trip also tells me that even Asian economies could hit some headwinds over the next few months.

I attribute this to three forces …

Force #1: The disaster in the U.S. mortgage markets.

It's bad. As much as $1.4 TRILLION of mortgages in the U.S. are at risk of default, or at best, falling into late payment status.

Already, two Bear Stearns hedge funds that invested heavily in mortgages have been wiped out. And at least two overseas funds, plus Macquarie Bank in Australia, have taken some big hits on U.S. real estate and mortgage investments.

But it's not the dollar amount of the damage overseas that I see as the problem. Foreign economies do not have big exposure to our crumbling mortgage markets.

Rather, it's the psychological toll that has me worried.

It didn't matter where I went … nearly everyone I talked to was worried about the U.S. mortgage market disaster. And when investors are jittery, they tuck their heads into their shells.

On its own, this nervousness is not enough for me to throw up the caution flags. But I also see some evidence that …

Force #2: The dollar's weakness is beginning to affect Asia's export markets.

Already, one of Thailand's largest employers — Thai Silp South East Asia Import Export Co. — shuttered its doors and laid off more than 5,000 employees because the falling dollar made their exports uncompetitive in world markets.

Even Australia-based Macquarie Bank's executives are worrying about U.S. subprime mortgage woes.

And in Singapore, electronics manufacturers are also starting to feel the pinch of the weak dollar. For example, Creative Technology and Chartered Semiconductor are starting to see their sales and earnings slump.

The problems seem to be contained to the weaker companies in Asia. And longer-term, even though I expect the dollar to fall more, I don't think Asia's vibrant export markets will suffer all that much.

Still, there's no discounting the fact that this could be a short-term negative for Asian economies.

Force #3: Beijing is clamping down hard on speculation.

So far, China's government has been totally unable to ferret out the speculation going on in the country's stock markets. Beijing has raised interest rates five times since April 2006. It's also upped bank reserve ratios eight times since June 2006, with the most recent increase taking effect yesterday.

None of that has put a lid on the country's markets yet. Indeed, it's pretty tough to cool things down when you have 1.3 billion people coming onto the world stage and wanting to get rich.

Nevertheless, my sources in Asia tell me Beijing is determined to snuff out some of the excess in the markets there. I think another interest rate hike and another hike in the bank reserve requirement are coming.

Plus, my charts tell me the markets in Asia have gotten too far ahead of themselves.

Bottom line: I believe China's stock markets could see some air escape over the short-term. I would not be surprised to see the Shanghai A and B indexes fall 10% or 12%.

So What Can You Do? Take Some More Profits NOW!

To be clear, in no way does this suggestion indicate that the long-term bull market in Asian economies or natural resources is over. Hardly! Much higher price levels are coming across the board.

But given the three short-term forces I just laid out for you — AND the indisputable fact that a major correction is already underway in U.S. stock markets — I think it's time to take some more profits off the table.

In my July 5 Money and Markets column , I gave you an update on some of the names I've mentioned in the past. And I suggested unloading a few — XTO Energy (XTO), Cimarex Energy (XEC), the AIM Energy Fund (IEFCX), and the Dow Jones U.S. Energy ETF (IYE) — if you were holding them.

Today I'd like to give you an updated list (capital appreciation through the end of trading on August 13) …

Investment Name Ticker Mention Date Gain/Loss
Oil Service HOLDRS Trust
StreetTracks Gold Trust
Tocqueville Gold Fund
Energy Select Sector SPDR
Vanguard Energy VIPERs
iShares S&P Global Energy
Powershares WilderHill
Clean Energy Portfolio
US Global Investors World
Precious Minerals Fund
DWS Gold & Precious Fund
Sadia SA
Cresud SA
Enerplus Resources Fund
U.S. Global Investors
Resources Fund
Profund Ultrasector
Oil & Gas
Matthews India Fund

 Data Date: 8/13/07

Now, if you're holding any of these investments, your results will vary based on when you bought and the fees your broker charges you. I also mentioned some of these more than once. But as you can see, a lot of them have posted solid gains.

So, I suggest grabbing any profits you have on Sadia (SDA), Cresud (CRESY), and the Matthews India Fund (MINDX). You might want to look at the rest of your holdings to see if there are any other positions you can scale back on.

Regularly taking profits like this is just good money management. It allows you to lighten up your portfolio a tad … and it reduces your downside risk.

But I repeat: Do not take this as a sign that the bull markets in Asia and natural resources are over … they're not even close to an end.

In fact, I remain firmly convinced that the long-term uptrends for most developing economies — China, India, Brazil and more — have much farther to go. Ditto for natural resource prices!

Best wishes for your health and wealth,


P.S. If you're interested in getting all of my recommendations as soon as I release them (including flash alerts), plus 12 monthly hard-hitting issues of Real Wealth Report that will keep you fully informed on the natural resource and international markets, subscribe now for just $99 a year.

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 .

Money and Markets Archive

© 2005-2018 - 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