Home
>
Stocks & Mutual Fund
>
Overseas Investing: Going Against the Mainstream

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.

Airbnb cleaning service Arlington Heights ..

In The News:

Red flags like processing fees, urgent countdowns and requests for full Social Security numbers expose fraudulent settlement sites targeting consumers.

Comprehensive analysis of Google Maps, Waze and Apple Maps examines usability, routing accuracy, data handling and features across the top navigation platforms.

Expert analysis reveals whether wired Ethernet or wireless Wi-Fi connections are safer for home internet use, plus practical steps to secure your network from attackers.

Australian construction robot Charlotte uses sand, crushed brick and recycled glass to 3D print fireproof, floodproof homes with reduced carbon footprint.

Cybercriminals are using fake invitation emails to trick recipients into downloading malware and stealing personal information and data.

Flying drones could help retailers fight a 93% increase in theft rates as Flock Safety promotes airborne security systems to track suspects and deter crime.

The Fox News Artificial Intelligence Newsletter brings you the latest news on the emerging technology every Saturday, highlighting top stories.

Hacker group Radiant stole data from 8,000 children at Kido nursery chain, demanding ransom and directly contacting parents with intimidation tactics.

As 18 states implement bell-to-bell cell phone bans, creative students use Google Docs, iMessage on MacBooks and Post-It notes to stay connected in class.

A sheriff's captain says deputies often spend hours writing reports between calls, but Axon's AI program, Draft One, helps them save crucial time in the field.

Sora 2, OpenAI's new video-generation app, can create AI-generated videos based on a singular prompt. The results are both mind-blowing and terrifying.

iPhone and Android users can reduce Wi-Fi calling battery drainage through settings adjustments, background app limits and stronger Wi-Fi connections.

Work email scams are becoming harder to detect as criminals use AI and spoofed addresses to trick employees into opening malicious attachments and links.

From her Arizona living room, Christina Chapman ran a covert hub that helped North Korean operatives infiltrate U.S. firms, netting $17 million in stolen salaries.

UC Santa Barbara researchers developed a soft robotic intubation system that achieved 100% success rates for experts and 96% for paramedics with minimal training.

Scammers exploit probate filings to target grieving families with fake fees and debts, Kurt "Cyberguy" Knutsson reports.

Automotive giant Stellantis becomes latest victim of widespread Salesforce breaches affecting companies like Google, Cisco and Adidas this year.

A woman from Washington reunited with her missing Maine Coon cat Louie after 11 days using Love Lost, a free AI-powered pet recovery platform.

Expert cybersecurity tips help Mac owners remove malware infections and strengthen defenses with antivirus software, password managers and system updates.

Meta's AI chatbot training rules bans sexual roleplay with minors and block access to child abuse material as regulators scrutinize its safety measures.

Online banking users face a new threat: web injection scams that overlay fake pop-ups to steal logins. Here’s how to spot them and protect your accounts.

Meta introduced Teen Accounts to Facebook and Messenger while launching a School Partnership Program for U.S. educators to report bullying within 48 hours.

Executive order signed by President Donald Trump tasks Robert F. Kennedy Jr.'s MAHA Commission with using AI to find new cures for childhood cancers.

New FileFix attack tricks Facebook and Instagram users into running malicious PowerShell commands disguised as Meta account maintenance to deploy StealC infostealer.

Step-by-step instructions help users migrate to Windows 11 while preserving emails, contacts, documents, and software licenses during the transition.

Overseas Investing: Going Against the Mainstream

Stocks & Mutual Fund