Pinnacle Activity Ticker
ARE YOU WELL INFORMED and UP TO DATE?
Buy and Hold is the mantra of Wall St. and it did work in the past but in these fast changing and volatile world conditions one has to be a nimble trader to make money and if you are not well informed you may be blindsided by things you were not expecting. What I am saying is that "stock tips" from your broker, your brother-in-law, your fellow worker are not enough and increasingly unreliable unless your source is well informed and up to date beyond the latest headlines.
Getting to the heart of the matter requires a great deal of due diligence on a personal basis, it is no longer enough to be a good chartist, a good balance sheet reader etc. these days you have to understand market sentiment and world politics to identify sectors and countries and regions that are in or out of favour, and even ANTICIPATE developing trends to get in front of.
For example, in years past I made good money by identifying countries with great economic prospects and indeed, we hear lots about the booming Chinese economy for example that many commentators predict will become the #1 economy in the world over the next decade. The problem with that type of generalization is too many investors have a "knee jerk" reactiopn and either invest with little regard for RISK, or they shun the country entirely when they hear that growth is falling from 10% to 7%. I could cite many more "perceptions" that people have, for instance, Columbia is controlled by drug lords so is unsafe to invest in? Ditto Mexico, Russia is a Communist nation and very risky and so on.
REALITY; many of these countries offer much better market returns than countries perceived to be more "STABLE" and if you are well informed and "SELECTIVE you can take advantage of situations 95% of investors are unaware of, or at least not well informed enough to make prudent decisions.
Most investors are familiar with the aconym "Bric's" and indeed I made good money investing in Brazil in years past, and for those who are still in the "mutual fund" mode of thinking, you can TARGET just about any market or sector you wish much more efficiently with ETF's and at much lower costs. I made good money with the Brazil, Indonesia and Malaysia ETF"s in years past, also some South American countries a few years later. The advanatge is that you can cycle in and out as conditions change without having to pay exhorbitant fee's, in fact less than 5% of mutual fund managers beat the index of their market, not something that justifys the front or back end loads in most cases.
Right now a "slowdown" in China is in the news, and what is causing that? Numerous things of course, but does that mean 7% growth no longer offers potential for growth and profits? Of course not, but again you have to identify situations within a sector, (what is in demand) and companies within that sector that can do well in the current cirumstances. If you were investing in Australia for example you would have to take into consideration how its exports are impacted by what is going on in China.
To give an illustration of WHY a broad based knowledge of things that are changing in our world is so potentially valuable is the simple fact that China's low wage advantage is eroding as their own people become more wealthy and they develop an internal market rather than relying mostly on exports. Another key factor is that as energy costs RISE, the transportation costs of shipping raw materials to China for manufactiure, and then shipping the finished goods back to Europe and the America's begins to impact margins, so who benefits?
Here is a compelling example to compare with some other nations. Europe is much in the news these days for sovereign debts that may be as high as 100% of GDP! How many people know that Mexico has a national debt of only 27% of GDP compared to that of the U.S. of over a 100% and the cost of buying from China is going up (around 30%) while the cost of buying in Mexico is down 40%, or that Mexican wages are now competitive with China while being right next door to the U.S. allowing shipments in a day or 2 rather than several weeks or a month? Did you know that Mexico is now the worlds 4th largest exporter of automobiles, or that workers have a median age of 23 compared to China's 32?
It is facts like these that you need to know to make intelligent investment decisions. The Mexico ETF EWW is up much more than the more popular Chinese ETF, another advantage of ETF's being that you can sell them anytime during the day at the then market price with no penalty while with Mutual Funds you can sell only at the end of day price and many have trailing fee's to keep you invested. I have numerous succesfuk investments in Columbia, a country that has stabilized and changed dramatically in the last 5 years, in fact BOTH oil and precious metals investments are doing well there, and Mexico likewise is no longer the drug smuggling haven and is in fact the #2 world producer of precious metals with many Canadian companies active there. Two other countries that are worth a look at for rapidly improving conditions and investment opportunities are the Philippines and Turkey where i also have made recent investments.
If you limit your investments to just the U.S. and Canada then you are limiting your profit potential and the benefits of diversification, but you MUST be well informed, willing to cycle in and out as conditions in a sector or country change. Items like Saddam Husseins "weapons of mass destruction" ending up in Syria explains a lot. Elderly rulers in Saudi Arabia with no succesion plan and rivalry offer potential for religious ferment between Sunni and Shia factions, potential war with Iran and many more factors mean you will either be paralyzed by fear of what "might" happen and fail to invest prudently, OR you can be informed and make intelligent choices on the most likely outcomes.