Invest Globally, Think Contrarily
Panic sales in emerging markets will often create bargains, like the four shared here by Benj Gallander, who explains the other benefits and limitations of contrarian global investing.
Benj, tell us within your contrarian strategy how an individual investor might go about investing globally.
Well, what I do is look at countries that are often having difficulties.
A perfect example is back in the mid-1990s. I was buying into a lot of the Asian countries that were having problems. It’s key to look at a region like that, because often what happens is stock market in certain countries get decimated, and when that happens it generally leads to certain bargains.
What I do try to avoid, though, is going into countries where I know there’s a lot of corruption. If there is a lot of corruption, then you know any returns you have will most often be trimmed back, because the other people have to get what they consider to be their fair share.
So what’s a good way, then, for investors to begin researching the markets that might be right for them?
Well, what you can do is look at the annual returns for different countries. A number of years ago, almost every country in the world was way up in value, and then in 2008 they got absolutely killed, so that’s a point where things are of incredible interest.
A number of months ago, I got very interested in China. Part of it was because of what happened just recently with Sino-Forest (Toronto: TRE). When Sino-Forest had all their difficulties, a lot of Chinese companies got painted with the same brush.
What I did was look at companies like China Security and Surveillance (CSR). It was trading at around $4.50 and they had a $6.50 offer on the table.