Trading is not a game of exacts. Perfectionists need not apply. Markets are made up of many irration...
A Fuller View
12/02/2005 12:00 am EST
David Fuller is a true global investor focusing worldwide for his ideas. From his London home, he offers an always fresh perspective that sets him apart from most US advisors. Here, he looks at his favorite long-term markets-Korea and India-as well as currencies and gold.
"My personal investment portfolio is currently fully invested and I never withdraw any money. Needless to say every investor should base their own portfolio on what is appropriate for themselves, given their assets, requirements and not least temperament. We are all different. Along with Japan, Korea is my favourite industrial-based developed country stock markets for the very long term. South Korea is a country that is currently regaining confidence in itself, not unlike Japan. However, I feel that the Koreans are further along this path.
"So how can one participate in Korea? For US investors, there is an iShares MSCI South Korea (EWA ASE), as well as the Korea Fund (KF NYSE) and Korea Equity Fund (KEF NYSE). There has been a pullback in the Korean market recently, presenting another buying opportunity. My only reservation is that I expect to see a global stock market shakeout in 2006, which would present an even better buying opportunity. Consequently I will proceed cautiously. Thus, I expect a significant sell-off for global stock markets in 2006, but the light at the end of that tunnel will be a great buying opportunity.
"On a short-term basis, the Indian stock market is a bit expensive relative to the Asian region. Further, growth in profits is likely to slow somewhat next year. On a very long-term view, I maintain that India is the best growth and investment story on the planet. On a 20-40-year view, I think India will provide the kind of jaw-dropping, eyebrow-raising, mouth-watering, scarcely comprehensible performance that would make even Warren Buffet turn green with envy.
"We will see several bubbles along the way. But I want my investment portfolio to be permanently overweight in India. I hope to find patience and retain my nerve during setbacks, which will be buying opportunities. India is the real deal, for reasons previously discussed at length and available via the Search facility, and remains my favourite stock market for the very long term.
"As for currencies, I would not be surprised to see the US Dollar Index test 80 next year. Why? Continued upward scope for US short-term interest rates has mostly been discounted; the one-off tax-advantageous repatriation of overseas funds by US corporations has also been largely discounted; confidence in the US dollar's long-term fundamental position is understandably skin deep, and projections for lower interest rates in Euroland, the UK, and other countries have been shelved by central bank concern over inflation.
"Which currencies will appreciate most against the US dollar? Logically it would be resources, high-yielding, and Asian dynamic growth currencies. However none of the Asian currencies are allowed to float freely. Consequently, I expect that the greatest upward pressure will be on high-yielding, developed country resources currencies such as the Australian, Canadian, and New Zealand dollars. In addition, the euro and Swiss franc could see among the better rallies initially because so many forex traders have shorted these currencies recently. Also, sterling should rebound from the lower side of its range against the US dollar."
The key risk-on and off drivers today are the same – U.S. politics, global growth, other centr...
Stefanie Kammerman, the Stock Whisperer, to tell you the Whisper of the Week: GLD and SLV in my week...
Matthew Kerkhoff, options expert and editor of Dow Theory Letters, continues his 14-part educational...