Global Investing: Vivian's View
02/13/2004 12:00 am EST
Vivian Lewis speaks seven languages, lives in New York and London, and came by The World Money Show from India. Her model portfolios rose 73% in 2003, though the modest Harvard Phi Beta Kappa notes that the dollar's impact accounted for a third the gain. Here's her global outlook.
"In 2004, I expect more of the same. To benefit from foreign stocks in a declining dollar environment, the first thing to do is to avoid companies, which make money by exporting to the US. You probably want to be very careful in Asia not to buy an exporter which depends on the US market for its sales, even indirectly, say via China.
"China worries me because the market looks like a bubble just as much as the Internets in 2000. Examples are the IPO of China Life, which was greeted by the market like it was a dot com; the premium on China closed-end funds; the fact that the Beijing government directed $45 billion of US Treasury notes it had bought to sustain the remnembi exchange rate to two essentially insolvent state banks that it proposes to spin off in the ADR market later this year (at which point presumably they can pay back the dollars to the Bank of China). I would also note that Chinese p/e ratios are out of line with the rest of the world.
"I would recommend India rather than China or Russia because of rule of law and free press leftover from the British. India is getting away from socialist theory that commanding heights of the economy need to be controlled, and everyone speaks English. The liberalization and internationalization of stock markets are removing the old price disparity of ADRs. The price disparity was because there used to be a shortage of ADRs, so they commanded a premium to the ordinary Mumbai shares. That has essentially ended, and the prices are arbitraged. In addition, the exchange control is being lifted so Indian companies can borrow internationally up to the full amount of their existing capital to build plants abroad.
"I'm not sure inflation is really dead and I'd suggest stocks of companies making things people have no choice but to buy, like food and pharma companies, with a special emphasis on generics I also believe that every portfolio should protect against the dollar decline with gold. I would also note that the time may have come to look at physical gold rather than gold stocks. I am waiting on the release of an exchange traded fund from the World Gold Council. Once it clears hurdles by the SEC and by copyright protection suits, it will be something to buy."
According to The Hulbert Financial Digest, Vivian's Global Investing portfolios rose 70% last year. She maintains a conservative yield-oriented portfolio, a buy-and-hold portfolio, and a speculative portfolio. She also maintains a portfolio of country, sector, and regional funds. Here are the buy-rated funds in that portfolio:
Herzfeld Caribbean Fund
iShares MS Australia (EWA ASE)
iShares MS European Monetary Union (EZU ASE)
Chile Fund (CH NYSE)
France Growth Fund (FRF NYSE)
Germany Fund (GER NYSE)
Central Europe Fund (CEE NYSE)
iShares MS Japan (EWJ ASE)
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