Vivian's Global View

06/09/2006 12:00 am EST


Vivian Lewis

Editor and Publisher, Global Investing

Although not forecasting a bear market, global investment expert Vivian Lewis is concerned about weakness over the coming months. Here, she looks at markets around the world to find those select opportunities that she still considers a a buy.

"The average decline of the 14 US bear markets since 1949 was 26.5%, from 50.5% (2002) to 8.3% (1998). Wall Street is off only about 5% from early May, so even if you pick the midpoint between the best at8% and the average of 26%, it may get ugly. Foreign markets, such as India, are off nearly four times as much.

"Investors should not be tempted to get in and out of the market. Average investors cannot capture every market move without daytrading, a self-defeating strategy harmful to mental and physical health. Between now and the end of October, the big money will be made on the downside. We are now at the start of a medium-term correction. Average investors should focus on capturing most of the correction while avoiding periodic counter-trend rallies and whip-sawing. Go into cash. Rigorously pick stocks to buy, hold, or buy.

"What is still a buy in this environment? In my view, Teva Pharmaceuticals (TEVA NASDAQ).W.R. Hambrecht analysts ask, ‘With inflation fears and market worries about a slowing economy as rising energy and interest rates suffocate discretionary spending in the US, while emerging markets GDP growth continues unabated, is there a better stock to own than Teva?’ They expect Teva to benefit as the US economy slows, adding pressure to save on healthcare costs with generics. It is ‘the hedge of the decade.’ They expect 20-25% year-over-year growth.

"Indian growth reached a whopping 9.3% for the March quarter, an argument for such stocks as banking firm ICICI (IBN NYSE). India’s stockindex fell 17.5% from its peak, after rising 330% in the past three years. The correction is a buy opportunity. Meanwhile, with local buying up, Japan is also compelling. Alternative fuels can’t be stopped. China's Suntech (STP NYSE)had a 97.7% rise sequentially in first quarter net to $19.3 million on revenues of $89.9 million. Meanwhile, oil exploration won’t stop. And we consider Schlumberger (SLB NYSE) a buy .

"The emerging markets debt market has been hit more heavily than junk bonds, and in our view, wrongly. Attractive is Salomon Emerging Floating Rates (EFL NYSE), which ishedged against rate rises and the unhedged Templeton Emerging Markets Income (TEI NYSE). Higher interest rates will slash demand for commodities but will cut the investment in replacing them even more. I again suggest buying the DB Commodities Index Fund (DBC NYSE)."

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