install vinyl siding best siding siding types best siding lindenhurst hardie plank siding round lake heights .. Chicago Drug testing

Overseas Investing: Going Against the Mainstream

TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This strategy works in the short term, but can lead to difficulty in the longer haul. It also prevents investors from finding the great opportunities that experts have missed.

Most of the time, when the market is rising merrily, following the crowd can be profitable, even if gains are only average. For those who are less adept at making market decisions, following the right crowd may even demonstrate wisdom. But eventually, one's lack of independence takes dominance. The real problem arises at the turning points. When the market has been moving up, and suddenly takes a major downward shift, investors must be able to think for themselves and adapt. Those who cannot are left holding the bag. Just as important is the ability to recognize an upturn when everyone else believes there is no hope. Last April, those who stayed on the sidelines missed great opportunities. Luckily, our readers were able to achieve excellent gains. Of course, no one can perfectly time the market, but it is helpful to recognize when turns are possible, or even likely.

Similarly, when picking stocks, it is important to see past the opinions of "experts" and recognize real value. In recent years, "Wall Street" has become more of a marketing machine than a center for careful analysis.

Over time, we can learn who the few viable analysts are, but in the meantime, most of us are almost better off ignoring the salesmen in the media.

Let's look at how following the crowd works. Quite recently, an election surprise in India led to a market crash. The crowds who couldn't understand the results exited India's markets in droves, driving them down significantly.

This is a clear opportunity for investors. India has tremendous potential. Yet, those who simply follow, without looking beyond the immediate news, will miss that reality. Our analysis of India's politics is that everyone is now on board for free markets. There is no longer a great impetus for socialism. Therefore, a victory by the Congress Party doesn't foretell an effort to disrupt the strong economy. It merely indicates that many are satisfied with life, but probably more secular than the previous ruling party. The reaction by investors here is confused. Clearly, the fact that the Communist Party's support for the new government may cause some concern, but the leading parties in the new government have long-since abandoned any socialist leanings. Among the first meetings after the new election was a summit where it was decided that Congress would continue on the path, despite objections from the left. No party that wishes to be re-elected will discard a successful economic strategy. Thus, we strongly believe that the success of the Indian economy is safe.

Investing in India is still not easy. A limited number of shares of Indian companies are available on U.S. exchanges, each carrying relatively high P/E's. Countless smaller companies, likely with better prospects are available on local exchanges, but purchasing those is costly for the small investor; we must look for more practical ways to approach these markets. One useful method is to invest through diversified closed end funds selling at discounts, such as the Morgan Stanley India Investment Fund (IIF). These fund managers have better access to local research and markets, and have people on the ground to evaluate the situation on a daily basis. A similar method is to buy Exchange Traded Funds (ETF's), which may be available for some nations or regions.

At the same time India's market fell, the Brazilian market took a heavy hit. While we are still optimistic about the Brazilian economy, we believe the risk factors there may be stronger. Firstly, the leader of the government is unabashedly socialist, despite the fact that they have recognized the importance of foregoing socialism to keep the economy strong. However, once the economy strengthens, it remains unknown if Lula da Silva will pursue foolhardy anti-economic policies. Secondly, there is some uncertainty regarding Argentina's ability to maintain stability, and another collapse in Argentina would again draw Brazil into the slump. Thus, while we are willing to invest small amounts in Brazil, we feel the situation in India is more secure, and better prepared for long-term growth.

Diversification is, as always, a good strategy to help protect against uncertainty. Being diversified across countries is also wise, even though international diversification has lost some of its impact in these days of globalization. Still, if some money is placed in markets that are less dependent on our own, we stand a better chance of being protected in times of U.S. weakness.

"The crowd" seems to feel more comfortable investing "at home" regardless of where the real opportunities are, and where the risks may be. Instead, we should look worldwide, seeking to reduce risk and increase returns. If, for example, it is momentarily safer to invest in Australia than in the U.S., that's where we should put our dollars. The U.S. remains attractive at amount of investment dollars in that large powerhouse economy, but are less excited about 2005 there.

Keep investing, and keep alert. In times like these, changes may take place more unexpectedly than normal, but we can adapt if we remain vigilant and avoid following the crowd.

To send comments or to learn more about Scott Pearson's Investment Management services, visit http://www.valueview.net

Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S.

In The News:

8 Penny Stocks to Avoid

There are many good penny stock investments available, which could... Read More

Downdraft

For the year 2000 we have seen hundreds of mutual... Read More

Investing Basics - Stocks, Mutual Funds, Real Estate & Online Investing

Have you ever thought of investing? Do you have a... Read More

Who Knows?

The Shadow knows. Remember him? It seems a shadow has... Read More

A Funny Thing Happened on the Way to the Stock Market

On the 40 year journey through the turmoil of a... Read More

Zero Sum Game

Most people think the stock market is a zero sum... Read More

Seecrets on Investment: Tired of Making Huge Losses in the Stock Market ? Part 2

Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More

Online Investing & Stock & Share Trading: 4 Reasons Why Most Online Investors & Traders Go Broke

Are you attracted to the idea of being in control... Read More

What Does it Take to be a Stock Trader?

It takes a total mental commitment to the task. It... Read More

You Don?t HAVE To Be Trading

As a novice trader, you'll often feel the need to... Read More

Small-Cap Stocks: The Beginning of the Journey

When an individual investor wants to roll up his sleeves... Read More

How (NOT) to Buy Mutual Funds

When it comes to mutual funds, there is a lot... Read More

Dispelling Illusions of the Stock Market

How can you dispel an illusion unless you look directly... Read More

Low Tide

When you stand on the ocean shore and watch the... Read More

Choosing a Stock Broker

If you were to find that you had some severe... Read More

Will the Stock Market be Lower in October?

The stock market often closes a week in the middle... Read More

Keep Your Profits

It looks like we have now entered a new bull... Read More

Fools Gold

The stock market has been in an up trend for... Read More

The Holy Grail (of Investment)

Every year I go to the Money Show in Orlando,... Read More

Money, Insanity and Wall Street

Money: the most charged word in the planet. It means... Read More

I Love You, Warren Buffet

Sometime around 1980, can't remember exactly, there was a flight... Read More

Look Out The Window

Quick, look out the window. It's raining. No, the sun's... Read More

Analysts - Do They Really Know The Stock Market?

When you become interested in a stock or mutual fund... Read More

Patterns

The Law of Chaos is the theory of random unpredictable... Read More

Advantages and Disadvantages of Mutual Funds

Outlined below are some of the advantages and disadvantages of... Read More

huge lighting savings neptun lighting Pete's produce ..
huge lighting savings neptun lighting Pete's produce ..