As Goes the US…
09/11/2008 12:00 am EST
Remember last year’s talk about “decoupling” and how international markets may be immune to the US’s credit woes? Those forecasts have just not panned out.
It’s still a case of “as goes the US…”. That was reinforced Wednesday when Lehman Bros. (NYSE: LEH) reported a huge loss of almost $4 billion for the quarter, leaving many pros wondering if the bank can survive and sending markets around the world spiraling down.
MSCI’s main world equity index fell to two-year lows, the Mexican peso took it on the chin, and gold fell to an 11-month low (around $765). However, there was good news for the US dollar, which reached a one-year high as reflected in the ICE Futures US dollar index (79.960), a measure of the value of one dollar against a basket of six currencies.
Adding fuel to the positive side, oil stabilized to around $102, and energy led Toronto’s market higher, on the heels of the Organization of Petroleum Exporting Countries’ (OPEC’s) surprise announcement that it was cutting production by half a billion barrels a day.
The markets continue to be incredibly volatile. Just this week, the Dow Jones Industrial Average rose 290 points one day and then dropped 280 the next. But the point to remember is that investing is a long-term project, and in such volatile times, careful selection is the key. No more can we lump together entire sectors or even regions.
This week’s features illustrate that very premise.
In our Q&A, Sam Hopkins, editor of Energy and Capital, discusses the recent Russia/Georgia conflict and gives his reasons why investors need to be careful, but shouldn’t pull their investments.
Tom Lydon, editor of ETF Trends, tells investors to be careful in specific areas of Eastern Europe, but offers an ETF that may allow cautious investment in the region.
John Snowden, editor of The IRS Report, finds a British design firm that is reaping big rewards from its specialization in property, transport, water, environment, energy, and resources.
And David Stevenson, editor of Adventurous Investing, is looking to take advantage of the booming residential property markets in the Middle East, specifically Cyprus and Turkey.
Global markets are clearly in turmoil now, but investors need to act like careful shoppers and find bargains off the beaten path.
Nancy Zambell edits Global Investing for MoneyShow.com. Her opinions are her own and not necessarily the views of InterShow or MoneyShow.com.