Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Global Investing Strategies 2011, U.S. Stocks, Dollar, Inflation and China

Stock-Markets / Investing 2011 Feb 18, 2011 - 06:50 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleKeith Fitz-Gerald writes: If you're a regular Money Morning reader, then you know that, d uring my appearances on national television or when I'm doing media interviews around the world, I frequently participate in something called a "lightning round " - a rapid-fire interview technique in which the announcer (and sometimes even audience members) run through a list of questions in rapid-fire order.


It's a technique that really puts you on the proverbial "hot seat." But I actually enjoy it: It forces you to think on your feet - which appeals to the former trader in me - and allows you to run through a bunch of topics in a very short stretch. In one way or another, each of these topics deals with global investing strategies.

I thought you might enjoy - and perhaps even find useful - a "highlight reel" of some of the best lightning-round questions that I've received in recent weeks, both in front of the camera and during the informal discussions that follow the presentations and broadcasts.

And we'll start with the topic that seems to be one of the most popular global investing strategies topics right now - gold.

Areas to Watch
Gold: I'm still looking for gold to reach $2,500 an ounce - but after a brief pullback. Not only are many people beginning to seriously accumulate the "yellow metal," but so are many countries, as one of the truly viable alternatives to traditional currencies and a means of diversifying their sovereign debt risk.

Silver: The "other" precious metal had been undervalued relative to gold, so it's been on the move in order to catch up. The relationship between gold and silver is more balanced now, so I'm expecting a shorter-term pullback here now, too. Some people are accumulating silver with the expectation that it will act like gold. But I think the real story that many investors are missing is that silver is used much differently than gold. And that means there's simply more demand for silver-intensive processes.

Natural Gas: We've got a lot of it here in the U.S. market. But the challenge we face, like many other nations, is being able to move it around ... to where it's needed. So even though I believe usage is going up and prices remain low, there's nothing there to immediately move markets. I'd rather concentrate on pipelines and LNG carriers: They get paid to transport gas - even if prices don't take off.

U.S. Stocks: If you're reading this, congratulations are in order: You've just witnessed history being made. At this point we've seen the fastest doubling in the Standard & Poor's 500 Index since Standard & Poor's (NYSE: MHP) began publishing the S&P 500 back in 1957 - a blisteringly quick 23 months off the March 6, 2009 bear-market bottom. The median rally in stocks since the early 1920s coming out of a recession is about 100%. However, the average rally over the same time period (depending upon which research you look at) is about 123%.

But here's a key consideration: That increase of 100% to 123% generally unfolds over a much longer timeframe than the rebound that we've just witnessed.

So what made the difference this time around?

It was the U.S. Federal Reserve and - to a lesser extent - the world's other central bankers, who have combined to inject massive (read that to mean "record") amounts of liquidity into the global financial markets. It's as if the central bankers are saying that they're happy to have stock prices zoom higher - which is great, except that it creates a whole new set of problems ... like new speculative financial bubbles.

I have to say here that the only market rallies that come anywhere close to the current one in terms of speed, magnitude and intensity are those of 1932 and 1935, which followed the "Great Crash" of 1929 and which were the result of efforts to shake off the after-effects of the Great Depression.

Both of those two gave back nearly all of their gains.

In terms of the U.S. market, the key takeaways are:

•The easy money has already been made.
•And you've got to use very tight "protective stops" at these levels to protect your gains.

The Fed is trying to keep the bear at bay ... but there are bear tracks everywhere. When the austerity debate really gets rolling, you'll really want to be careful - the bears can be very sneaky especially when they're behind you.

Investors and interviewers alike have asked me : "Should we take a lot of our money and put it into faster-growing overseas markets because they are growing and seem less risky?

Two terms in that question - "a lot" and "less risky" -- really concern me. You should never, ever concentrate your assets to the point you lose sleep over them. What constitutes "a lot" and what determines different levels of risk varies by a big margin from one person to the next. The global financial markets will create more than $300 trillion of new wealth in the next 10 years, and about 60% of that will come from outside such established economies as the United States, the Eurozone and Japan. I think it's only logical to have exposure to those markets as part of a carefully balanced global approach that's based on discipline, high income and a "safety-first" mindset - and not on "timing."

Overseas Markets: These are now "must-have" holdings. And if you're like many U.S. investors, who are just easing their way in, the best place to get started is with companies that I like to refer to as the "glocals." That's not a typo. That's the term that I use to describe large, U.S.-based multinational corporations whose global operations include a local presence - especially in the crucial markets of China and Greater Asia.

Most of these companies are publicly traded, and have their shares listed on the S&P 500 today. Also, people forget that 40% of the S&P's earnings already come from overseas. And that percentage is growing every day.

If you are more aggressive, and already have a solid portfolio in place, it may be appropriate to more-directly invest in those local markets, using some combination of local companies, mutual funds or exchange-traded funds (ETFs). Fast- growers such as Vietnam, much of South America, the Asian Rim and, of course, China come to mind.

Key Issues
The China "Bubble:" I get this question over and over: "Is China a bubble?"

And here's how I answer.

China isn't a "bubble economy." But it is an economy prone to bubbles. At first blush, it may seem like I'm splitting hairs . But there's actually a vast distinction between a "bubble economy" and "an economy prone to bubbles."

If you are formulating your own global investing strategies right now, this is a topic that's crucial to come to grips with.

Right now, China is where America was back at the dawn of the Industrial Revolution, and into the 1800s. Development is highly concentrated in the coastal regions, the financial system is maturing and the country's economy is characterized by rapid growth across the board. And everything - from intellectual property to real estate values - is under tremendous pressure ... to grow. So there are some real parallels. China is not going to stop growing anytime soon nor is it going to fail. But it is likely to have some hiccups...again, just as we did with two world wars, the Great Depression, 20 or so recessions and all manner of boom-and-bust cycles. Some of those hiccups will be quite wrenching in nature.

The key will be to "follow the money" into the best profit opportunities. And no matter what happens, there will always be opportunities - if you know what to look for.

I am convinced that China will affect every asset class on the planet - even if only indirectly - for the rest of our lives. I am also convinced that it represents the single-greatest-wealth-creation opportunity of our time, which is why I have spent a good portion of my life and career in the Pacific Rim - studying, participating and actively investing in related markets.

The Greenback: When I'm talking about the U.S. dollar, many words come to mind. "Junk" is too strong a term here, but we're darned close by many standards that have been applied to other countries - notably many in South America - in decades past. The only question is this: W ho is going to look in the mirror and be the first to announce that "the emperor has no clothes."

No country has ever bailed itself out by taking the path that we're following right now - not ever. But that doesn't mean our leaders won't try and that we won't have short-term success. But what will be the cost? Longer-term, the sloshing sound you hear "Inside the Beltway" is our wealth flowing out to sea, being carried away by the tides of financial history.

Inflation: It's already here - and with a vengeance. The government statistics are pure poppycock, which is why I feel like I'm getting mugged every time I go to the grocery store. You probably do, too. For example, in January 2009, the average price of a gallon of gas was $1.83 per gallon. Today it's $3.13, an increase of 71.09%. Sugar cane has risen from $13.37 to $35.39 per pound, a staggering 164.7% surge. Medicine, services...they've all gone up.

This is not good considering real median household income has dropped from $50,112 in 2008 to $49,777 in 2009, and may drop further when 2010 data is released. Long-term unemployed figures reflect a 146.2% increase.

Are these things bad?

Depends on your perspective. As I tell investors repeatedly, chaos is merely opportunity in disguise. You can duck your head in the sand and pretend it isn't happening - as many investors are doing right now - and I'd be hard-pressed to blame you. Or, you can do what my subscribers and I are doing, which is to actively build our wealth. We're enjoying a lot of success. This is just what the Rothschilds did, when they built their legendary wealth out of the European chaos of centuries past.

Put it this way...just because people are frozen by government incompetence, rising inflation, higher taxes, chronic high unemployment and a real estate market that won't bounce back for decades, your money doesn't have to be.

[Editor's Note: You can't find the world's best untapped profit opportunities without a well-built knowledge of the global markets. And Money Morning Chief Investment Strategist Keith Fitz-Gerald possesses such an insight - and more. The analysis and foresight Fitz-Gerald displays in this global-investing overview resulted from the same wisdom, experiences and skills he draws upon each day to establish market-smashing track records in his investment-advisory services.

Fitz-Gerald has displayed a particularly hot hand with the Micro-Quake Alert, a service that rewards subscribers with quick, consistent gains in small-cap and micro-cap stocks. To find out more about this mega-profit market niche that few traders have been able to consistently exploit please click here.]

Source : http://moneymorning.com/2011/02/18/...

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 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