After Japan Tragedy, Investing in Thailand Might Be a Good Bet Tuesday, Apr 12 2011 

After Japan Tragedy, Investing in Thailand Might Be a Good Bet

Japan – A Curious Conundrum Tuesday, Oct 12 2010 

I apologize for the lack of posts over the past few days but the move made by the markets last week has drawn more than a passing interest and caused me to delve into deep thought.

As I mentioned in the Week in Review the move last week by the Bank of Japan to cut interest rates and enact a new quantitative easing program along with the lack of moves by Indonesia and Australia coupled with the immediate rally in equity markets looks increasingly like a coordinated global intervention to push up equity prices to help Japan.

Looking at other Asian markets there is a flood of hot money roaring through these markets like a tsunami. For someone who was and still is bullish on the equity markets I have to take pause here. The Thai Bhat has rallied down below a crucial support level at 30 and there are calls from the business community to help stem the appreciation in the Bhat as this is hurting FDI and exporters just as the political climate is showing signs of stabilization.

This is more than a short-term issue and this flood of money will cause unintended consequences in 2011 as the Asian growth machine continues to lead the world out of the recession.

Strong growth across Asia, ex-Japan, is fueling inflationary worries as increased purchasing power is driving demand in local markets. The increased demand for products is beginning to fuel the flames of inflation.

But there is a thorn in the side of the central banks as they attempt to stomp out inflation before it takes root and that is Japan.

Continued slow economic growth in Japan is hampering efforts by other Asian central banks to stem the flow of hot money into their capital markets.

A rise in interest rates by Asian central banks would risk creating an enormous carry trade between Japan and the other Asian countries possibly adding further to flows of hot money into Asian equity markets.

But what has me most concerned was a simple picture a few weeks ago of a young Japanese woman putting up a poster extolling the virtues of investing in JGB’s. My concern here is twofold. First, as Japan enters into an environment where their aging population must increasingly redeem their JGB’s and foreign capital markets are unlikely to chase yield in Japan the only pool left to tap is the younger generation. By doing so this pulls money that would go into consumption or the Japanese equity markets.

If the younger generation decides to follow in the path of their parents and buy JGB’s it is unlikely that local participation in the equity markets will rise and create a new bull market in Japanese equities. Just as well, consumption figures will remain low and if consumption does not increase then it is likely that deflation will continue well into the future.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

4th Quarter Investment and Recommended List Thoughts Tuesday, Oct 5 2010 

The low for the year appears to be in and we are in a Presidential Cycle rally which should eventually take us back to the highs made earlier this year.

However, we are into October which is well known for the two previous crashes and not a generally positive month overall. October is one of the worst performing months for Gold so investors looking to add to Gold and Silver positions would be well advised to look for a buying opportunity as it comes becomes available this month.

For equities, it appears as though we are making a short-term top formation as worries are beginning to appear over not just third quarter earnings but the fourth quarter as well.

In addition, we have the unemployment rate on Friday along with 3rd Quarter GDP at the end of the month. Initial estimates have the GDP number coming in under 2% but we may just see a little boost given to the number, which has been the case over the past few quarters, only to see about a percent taken off in the revisions.

Investors would be well served to continue to follow the guidepost I put up at the beginning of the year focusing on blue chip stocks with solid dividends. Large institutions are just beginning to jump back on the dividend bandwagon and small investors would be well served to get aboard first.

With corporate balance sheets flush with cash we are likely to see a push for increased corporate stock buybacks and dividend increases along with increased M&A activity.

In terms of my recommended list, I like a number of global firms.

In Asia I am bullish on agriculture, banking, and stocks connected to automobile makers but not the automobile makers themselves.

In Europe, there are a number of interesting stocks in Greece which have no connection to the sovereign problems with strong dividend yields and are basing at the present time.

The German industrial machine is of particular interest with export demand showing signs of strength.

In North America, I like banks not in the US and oil and gas stocks with strong dividend yields.

Gold and Silver bullion is attractive while the best values in the mining industry continue to be at the exploration level rather than the development or production levels.

Defensive stocks with solid dividend yields will provide excellent value over the final quarter into next year.

You can contact me further details on the recommended list.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

The Chinese, Thai, US Bond Markets, and the Equity Markets – Two Ships Passing in the Night? Thursday, Sep 30 2010 

Small investors have fled the stock market since the crash of 2008 seeking safer returns in fixed income despite yields on most US Treasuries below 1%. For the past 30 months investors have poured money in to fixed income investments seeking safety and stability after the 2008 market crash.1 This in turn has pushed yields down to unheard of levels and forced bond managers to chase yield.

Corporate investors have been coming to the market in size as well as signified by recent offerings by McDonalds, Oracle, and Microsoft.2 Corporations, whose balance sheets are already flush with cash are refinancing existing debt or looking to lever up with potential acquisitions on the horizon.

M&A activity is on the rise with corporate balance sheets flush with almost $3 trillion dollars in cash. Over the past few months, companies such as Intel and Unilever have made sizeable acquisitions while the commodity sector is heating up with BHP’s bid for Potash and Kinross’s takeover of Red Back. Even the healthcare sector is getting involved with Sanofi-Aventis pursuing Genzyme.

Even the Federal Reserve is jumping into the bond market by taking principal repayments and expiring mortgage paper and investing the proceeds in US Treasuries.

Overseas, China just issued 50 year bonds and Thailand is considering a 50 year issue as well. This is good news for their respective local bond markets as long dated bond issues increase market liquidity and signify investor confidence.

But as the tide of cash rolls into the market there are investors pulling out. Last week the Chinese government announced that over the past year they have decreased their holdings in US Treasuries by $100 billion dollars while being active purchasers of European and Japanese debt.3 The Chinese may be diversifying their bond holdings much in the same way the Federal Reserve is swapping mortgage debt for US Treasuries or they may be opting to sell before the yields begin to rise.

As a contrarian investor, this is one sign that the bond market is in process of making a top while the stock market may be putting in a bottom. With the stock market currently showing weakness, bond managers chasing yield, and stocks in large cap companies yielding sometimes twice their current bond offerings, investors should look for value rather than chase a trade.

Even with the 2003 tax cuts on capital gains and dividends for the highest tax brackets ready to expire the risk/return ratio is becoming heavily weighted on the side of equities. Small investors would be best served investing in high quality blue chip equities with solid dividend yields that can provide a decent income stream over the coming years.

Any pullbacks during the final quarter of 2010 should be met with buying by small investors looking to chase dividend rather than bond yield.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Technical Notes – August 1, 2010 Monday, Aug 2 2010 

Hong Kong (Hang Seng Index)

The HSI stands at an important crossroads that will set the stage for a major move within the next two weeks. While the HSI has broken above its June highs, the 200-day moving average is providing ocular resistance while an ascending wedge formation has formed. The HSI looks to be entering overbought territory, a pullback may be coming shortly, and investors should tighten stops and be wary.

Longer-term charts sit at resistance levels and a move above these resistance levels would set the stage for a nice rally higher which may test old highs. If there is a correction, the strength of the pullback will determine the depth. Right now the technical indicators are all over the board and investors should proceed with caution.

Buried within the monthly chart is a pattern of lower highs and lower lows that needs to be reconciled before the market can move higher.

Japan (Tokyo Nikkei Average)

Political changes and continued deflation are causing the Japanese stock market to be a laggard in 2009. If the political waters begin to clear it is likely that the market can make a move higher closing the gap between its Asian peers.

The short-term charts may look like an ugly mess technically but if the 9200 level can hold, the economic slowdown is not too deep, and political indicators improve we may see the index move above the 50 day moving average.

The longer-term charts are sending clearer signals. If the current level holds as support, the stage is being set for a very good rally. One that may surprise and shock most portfolio managers as to the length and size of the potential move.

Should the current support level fail look for a move back to the 2003 lows and if those lows fail the 2008-09 lows.

Thailand (Thailand SET Index)

It has been my experience that whenever the Thai market is outperforming its regional peers, the stage is being set for a larger pullback. Managers have missed most of the run this year choosing to avoid the market waiting on the sidelines for the political waters to clear.

Both the short and long-term charts are in the overbought area signaling a pullback within the coming weeks. The SET Index may make a blowoff move to 900 but if that were the case investors should move to cash and get ready for a significant correction.

While I am bullish long-term on the SET and Thailand, the charts now signal that a correction may be in the cards and this 2010 outperforming market may give back a sizable amount of its gains.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.