How To Conquer The World For Fun And Profit
Regular readers already know my penchant for collecting Napoleon I era gold coins. Just like Napoleon Bonaparte, I too harbor a secret desire to conquer the world. But unlike Napoleon (or George W. Bush for that matter) I don’t want to invade them. I want to prosper by investing in their economies.
The Us economy is no longer the growth engine of the world. Rising prosperity levels in all across the world have caused a massive redistribution in the global economy. So what’s the best way to profit from this? Apart from reading several other posts and forming your own conclusions, you can blindly diversify out of your US and into global ETFs.
Here are some of the ETF/ETNs on my radar. Make sure you don’t blindly invest in them. I typically go to ETFConnect and make sure I read up a little bit on what it invests in, and more importantly that it’s not selling at a massive premium to its Net Asset Value
EWS: iShares MSCI Singapore Index
Singapore’s economy is booming. Their currency is also strengthening against the US Dollar (as is every other currency, so that’s pretty redundant!) and several people think it’ll continue to do exceptionally well in 2008.
EWY: iShares MSCI South Korea Index
Korea is booming too. And Warren Buffett thinks its stock market is at a good valuation. I bought KF instead of EWY, mainly because it very recently returned a 30% dividend which was used to purchase stock at a price which was the lower of the market price or NAV. I basically got re-invested at $28.50 vs an NAV of $31.55, which represents a 9% discount.
FXA: CurrencyShares Australian Dollar Trust
Direct bet against the US Dollar. This is like buying a CD, you get monthly interest currently around ~5%. You can also look at FXE, FXB, FXY, FXC and FXS – whatever tickles your fancy.
JSC: SPDR Russell/Nomura Small Cap Japan
The Japanese economy has been stagnant for a very long time. Looks like things are finally picking up. The Yen is also finally showing signs of strength too.
SWZ: Swiss Helvetia Fund Inc.
This is an ETF that invests primarily in low-risk blue-chip stocks based out of Switzerland. Most of them have a global presence and are household names like Nestle, Roche, Novartis, UBS AG, Credit Sussie, etc. As the carry trade slowly unwinds, the swiss franc should also continue to appreciate.
EWZ: iShares MSCI Brazil Index
This Brazilian ETF has been a stock to own this year. Its up almost 100% in the past 12 months. I’m not saying you should jump in now, but definitely keep it on your watch list.
INP: iPath MSCI India Index ETN
Another doubler, this currently seems overvalued. Its trading at a 20% premium to NAV. If I was a hedge fund, I’d buy the underlying stocks and short this one. But I’m not. So I won’t. But it has stellar companies like HDFC, Reliance Communications, Oil and Natural Gas Corp (ONGC), L &T, Infosys, and Satyam Computers. Definitely something to buy on a pullback.
These are just a handful of stocks to start you on your way to total world domination! Let me know if you have any of your favorites. Happy Investing!
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December 10th, 2007 at 7:07 pm
LOD,
If there is one thing I have come to expect, it is when you think things are really bad for a stock or economy they will turn. Likewise, when you think things are really great, expect them to correct. Just look at the recent housing bubble. It was irrational exuberance all over again.
With that said, it is always a good idea to diversify into a growing global economy. Thanks for the info.
December 11th, 2007 at 4:10 am
Several years ago I reallocated a large portion of my 401(k) into international. Needless to say it has been the star performer. I just wish that i had allocated more!
Best Wishes,
D4L