Trading is not a game of exacts. Perfectionists need not apply. Markets are made up of many irration...
Skousen: A Look from London
09/30/2005 12:00 am EST
"Travelling overseas always gives me a new financial perspective," notes Mark Skousen who sends his latest update from the London World Money Show, where he is currently appearing. Here, he offers h is latest top picks among foreign stocks and resource plays.
"One thing I've noticed while being abroad is that while Wall Street is stuck in a holding pattern, foreign stock markets from Britain to Toyko are rising sharply. As a result, I now recommend that half of your 50% portfolio in stocks be in foreign stocks. The best way to profit is to buy a good closed-end fund selling at a discount, such as the Morgan Stanley Asia Pacific Fund (APF NYSE). Yes, it's risen quite a bit, but is still selling at a 12% discount to its net asset value. In addition, exchange traded funds are available in most country stock markets. I currently recommend the iShares MSCI Australia (EWA ASE), which is still hitting new highs.
"Our favorite tech stock, Samsung Electronics, is becoming more productive with its capital, and investors are paying attention. I’m especially impressed with Samsung’s long-term vision and willingness to outspend its competitors significantly in developing future products. The Korean giant has dozens of new products coming down the pipeline, spending over $3 billion a year in R&D, with over 20,000 researchers in 15 labs around the world. The only drawback to Samsung is the difficulty in buying the stock. Your broker can buy Samsung for you on the Korean exchange, or in London (institutional investors only), but the minimum can be steep (usually $10,000 or more). An alternative to investing in Samsung directly is the Korea Fund (KF NYSE), which has 30% of its assets invested in Samsung."
"Meanwhile, inflation is coming back with a vengeance, and government spending, not natural disasters, is the culprit. Internationally, central banks from China to Argentina are gradually shifting toward non-paper assets such as gold. Former Fed chairman Paul Volker recently warned of an impending dollar crisis that could hit within the next few years. Let's be prepared by increasing today our portfolio percentage from 10% to 15% in gold and natural resources."
"Our primary emphasis will be to add to positions in precious metals stocks such as Newmont Mining (NEM NYSE) and Freeport McMoRan (FCX NYSE), as well as Tocqueville Gold Fund (TGLDX). In addition, US Global Resources Fund (PSPFX) is a broader fund that includes oil & gas stocks, and is also recommended. ExxonMobil (XOM NYSE) remains our favorite big oil company. It is now the largest company in the world in terms of market cap. With its vast resources in all stages of oil production and consumption, it is bound to lead the world in energy. PenGrowth Energy (PGH NYSE) also looks very good now. The stock recently was hit with some serious profit taking. It continues to pay out a solid 11% dividend, although some of it is return of capital."
The key risk-on and off drivers today are the same – U.S. politics, global growth, other centr...