For those who, like me, respect Warren Buffet's a en:
Of particular note are the bits about currency swings.Prepare for a U.S. Market Crash
By Anders Bylund
We're heading into a recession. You've heard about it for months, even years, what with the housing bubble, the war in Iraq, overextended consumer credit -- you name it. A recent Merrill Lynch (NYSE: MER - News) report says that the U.S. economy will grow by only 1.9% next year, down from 3.4% this year, and slower than the global growth rate of 5.2%. Even slowpoke Europe should pass us at 2.1%, though the U.S. is ahead of the average European GDP growth rate of 2.7%.
If these numbers are even close to reality, your next course of action should be obvious: Invest somewhere else for a while. The good folks behind that report suggest Japan, India, and Brazil as eminently suitable targets.
What's more, they expect that interest rate differences will cause the dollar to lose value against the yen, Chinese renminbi, and Scandinavian currencies, which means that even mediocre businesses in those regions should produce decent share-price returns over here, thanks to the magic of currency conversion.
Investing guru Warren Buffett seems to agree with the Merrill team. His Berkshire Hathaway (NYSE: BRK-A - News; NYSE: BRK-B - News) just bought its first-ever foreign firm and dropped hints about looking for more. The insurance, fast-food, and underwear conglomerate (among other things) picked up an 80% stake in Israeli toolmaker Iscar Metalworking for $4 billion, and Buffett said that he's facing increased compe ion from global-minded private equity firms. "They may end up buying some businesses we would have liked to have bought instead," he said.
Now, if you don't feel qualified to distinguish between Toyota and Tata Motors (NYSE: TTM - News), or between Statoil (NYSE: STO - News) and Petrobras, you could dip your toe in these promising markets through mutual funds or exchange-traded funds. Try the no-load, low-cost DFA Japanese Small Company (FUND: DFJSX) to get a manager with eight years of tenure guiding you through the Nikkei, for example. Or get some exposure to Brazil through the iShares MSCI Brazil Index (AMEX: EWZ - News) ETF. I've made profits by holding some iShares MSCI Sweden Index (AMEX: EWD - News) through another dollar dip, and I might do so again.
Even in times of domestic weakness, there are many ways to make money. That's the beauty of the global market, especially when coupled with the information-gathering power of the Internet. You could even check out our Motley Fool International Stock Report for more ideas from our best and brightest analysts. Lycka till, boa sorte, and kouun wo inorimasu -- or just good luck, as we say here in Florida.
Fool contributor Anders Bylund currently holds no position in any of the stocks or funds discussed here, though he drives a Toyota with GEICO insurance. You can check out Anders' holdings if you like. Foolish disclosure applies coast to coast.
I agree with the author's premise. Now is a good time to invest in funds that are weighted in Asia, and China.
Investing directly in Chinese companies is still extremely risky in my opinion, as they are still very far from a solid "rule of law" foundation and transparent accounting. If you decide to do so, do so with only the small portion of your portfolio aimed at the most risky investments.
I do think the guy is being a touch too pessimistic, but the US is in for, at the very least, a period of slow economic growth.
He is every bit right about the currency swings tho'.
China has, so far, remained committed to keeping its currency pegged to the US dollar. Recently it has let it "float" (read appreciate) against the dollar, but it can't hold back the dike forever, and will be forced to evenatually let it do so further. The longer it waits the worse the repercussions will be.
Meaning that, sooner or later, if you invest in China, even with flat growth, your renmenbi dominated investments will get some hansome built-in boost from the dollar's slide.
I don't know what RG is posting (on ignore) but one should always be prepared for a rainy day.
Judging from what I've read of his credit practices in another thread, I'm judging RG should be panicking. Those of us who are well-positioned in our finances will do just fine.
Federal Reserve to Cut Rates in 2007, Corporate Bond Sales Show
http://www.bloomberg.com/apps/news?p...f_Y&refer=home
Bond traders concur that the economy will be in something of a slump, causing the Fed to cut interest rates to stimulate it.
Take RG off ignore. RG argues his points well and doesn't stoop to personal attacks like people such as myself. If you put people on ignore, you are no different then Boutons.
Actually, holders of variable interest loans such as credit cards, benefit, as do people who consolidate debt (like student loans).
My interest payments will go down allowing me to pay off my debt that much quicker.
I have boutons on ignore as well.
You are wise.
Profit from my wisdom, put them both on ignore.
"wisdom"
I kid the man.
What's the point of being here if you are going to ignore posters?
You're not on ignore.
That's like asking the question what's the point of them being here if they're going to be put on ignore by me?
Their posts don't deserve to be read by me anymore than my presence here demands that I read everyone's posts.
Thank you.
I agree. I like RG's post. While I don't agree with everything, he crafts his arguments well.
You're not on ignore either.
Why the concern for my seeing Random Guy's musings? I've been in this forum a long time during most of which Random Guy wasn't on ignore. That I choose to ignore him is a choice I believe has improved the forum.
Before, we used to dominate threads by incessantly arguing the same points over and over and over, ad nauseum...generally to the exclusion of almost everyone else in the thread. It got old.
He and I will probably never agree on anything of substance. I believe my points are well sourced and supported, so does he.
What's the point in monopolizing the forum with an effort that goes unappreciated outside our on two egos? Seriously, this isn't a think tank that is accomplishing great things. It's a freakin' political forum populated by a bunch of people that have absolutely no bearing on the outcome of those things over which they argue.
I prefer to stick to entertaining arguments with the tin-foil hat wearers in the forum. Random Guy isn't one of those. Neither is boutons or any of the approximately half dozen other regular posters I have on ignore.
And, if you ask me, a lot of threads are hilarious when you only see one side of the arguments.
Now, move along, there's nothing to see here.
Last edited by Yonivore; 09-26-2006 at 03:51 PM.
This is a web forum where people come to exchange ideas about politics, news, religion, money, and anything else that doesn't belong in the Club or troll forum. Putting people on Ignore is silly, if you can't build consensus by proving your point through debate then your argument hasn't been made strong enough.
See, you're not on ignore either. Although, you once were.
Besides, I think Random Guy and I have exchanged just about every idea we've ever had about everything we've ever discussed.
boutons and the others just don't have any ideas worth discussing and they're not entertaining.
So sue me.
Dang, I haven't seen this much concern over a non-issue since Valerie Plame was "outed."
Putting someone on ignore is an act of cowardice.
Okay, I'll bite.
Then why does Kori even allow the option on her forum? Is she a coward?
Not allowing Mods to be put on ignore is an act of cowardice.
Okay, I'm back to ignoring you even though I can't put you on ignore.
In the political forum, putting someone on ignore just because one disagrees with another's beliefs is cowardice.
In other areas, not so much.
Good job ignoring me, coward.
If you really, really need to exercise your cowardice with me, I'll make another screen name for this forum that you can freely ignore. Would you like that, coward?
Yoni is my new favorite spurstalk posting guy.
Really, how old are you? Seriously, you had me fooled into thinking you were at least an adult...until I read this post.
As I just explained, I'm not ignoring Random Guy because I disagree with him. If that were the case, there'd be a whole lot more people on ignore. I put him on ignore, and would do the same with you if I could, because our discussions are neither productive or conclusive...they just go on forever and ever and ever.
For those of you who asked the question, this is what I'm talking about. I call it feeding the monkey. Let's see if he throws more dung at me.
Hey, ChumpDumper, seriously, do what you want. Be sure an check with your mother first though.
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