Posted January 2, 2012 at 3:06 am
via Fidelity Viewpoints
What trends will shape the investment landscape in the years ahead?
In honor of the 30th anniversary of Fidelity Select Funds, Fidelity sector portfolio managers highlight 30 provocative investing themes–three per sector.
Get the details by clicking on each sector icon:
Wealth Wire Note: You can easily invest in each sector above, minus Telecommunications, via the SPDR sector ETFs…
Posted December 13, 2011 at 12:45 am
by Gary Gordon
In 2004, South Korea and Australia began exporting more to China than they did to the United States. By year-end 2008, Japan and Brazil exported more to China than to the U.S.
Not surprisingly, when the Chinese government expressed an intention to rein in rampant inflation through tighter fiscal and monetary policy (November 2010), many countries that depend on their exports to China began a year-long bearish retreat.
In fact, ETFs for resource-rich countries (e.g., Brazil, South Africa, Chile), as well as China itself, were hit the hardest.
Granted, the sovereign debt crisis in the Eurozone also played a large role in poor performance. Nevertheless, the fear that tightening in China would lead to lower demand for the world’s products, services and commodities played the largest role in damaging the emerging market growth story.
In my estimation, though, worry is being replaced by anticipation. Whereas double-digit GDP and rapidly rising consumer prices encouraged China to tighten, recent developments led to the first easing of bank reserve requirement in 3 years. Specifically, inflation had [continue]…
Posted December 12, 2011 at 2:38 am
by Matt Krantz
Sin is in on Wall Street as investors pick vice over virtue and pour money into drinking, smoking and gambling stocks.
“Socially irresponsible,” or “vice” stocks, especially tobacco, are paying off for investors who are focusing on these industries’ financial, not social, attributes. Shares of tobacco companies Lorillard, Philip Morris and Altria are up 34%, 29% and 15%, respectively, this year — smoking past the 1% year-to-date gain by the Standard & Poor’s 500.
Alcoholic beverage stocks aren’t falling off the wagon either. Diageo and Brown-Forman are up 14% and 13%. And gaming stocks such as Wynn Resorts and Churchill Downs are each up 14% — a welcome offset to what’s shaping up to be a disappointing year for stocks at large.
“Vice stocks are showing they are a necessary part of a diversified portfolio,” says Jerry Sullivan, manager of the Vice fund, which invests in those industries. Fund-tracker Morningstar says it has returned [continue]…
Posted December 4, 2011 at 11:26 pm
Brazil will be heavily in focus over the next couple of years since it is hosting two of the largest sporting events in the world.
Either of these events—the FIFA World Cup in 2014 or the Olympics in 2016—is a big deal on its own. Hosting both is both a huge coup and a tremendous opportunity from a business point of view.
Both events will require a dramatic upgrade to the infrastructure within the country, which should spur a considerable amount of economic activity.
Beyond these major sporting events, Brazil has enjoyed rare political stability for number of years. That, combined with sustained growth for the last decade, has transformed the country into a blossoming economic powerhouse.
Brazil has a number of things going for it including scale, abundant natural resources, and a politically favorable world position.
It has no significant enemies and a large world customer base—particularly China, which is anxious to acquire lots of iron ore and oil, of which Brazil has plenty.
As a result, economists are predicting that Brazil’s GDP growth should average [continue]…
Posted November 23, 2011 at 1:14 am
Brazil’s stock market is having a tough year. Systemic risks in the core economies have taken a toll on big emerging market equities.
The popular iShares MSCI Brazil (EWZ) exchange traded fund is now trading at Sept 2008 levels, just before it rolled down a hill to around $20 a share.
Yet, talk to any international fund manager and more often than not the worst case for them is just sit out Brazil for now.
They believe in the long term story of a rising middle class, trustworthy fiscal and monetary policy, and continued long term strength of commodities, of which Brazil is a leading producer.
So for the daring, stock forecasters at ValuEngine have a list of five big name Brazilian companies ranked a buy.
Here they are [continue]…
Posted November 18, 2011 at 1:30 am
by Scott Cendrowski
Ever since the great crash of 2008, when emerging markets plummeted more than 50%, one strategy has jumped in popularity: buying multinationals to play the fast-growing markets. Giants like Coca-Cola rarely collapse like their developing markets-based competitors.
They sell into all the hottest markets such as Brazil, India, and China. And nowadays, multinational CEOs seem to begin every conversation with a story about these far-flung markets.
Goldman Sachs strategists came out with an endorsement two years ago. They composed two baskets of stocks and called them the BRICs Nifty 50. One includes emerging market companies; the other has multinationals with exposure to emerging markets. The strategists concluded that you could hop back and forth between the baskets, depending which stocks offered better relative value or growth prospects. And over the past five years, both groups have risen nicely.
But now, with European economies in shambles and the U.S. undergoing a slow recovery, investors are turning that wisdom on its head. The myth of multinationals, says Robert Holderith, founder of Emerging Global Advisors, is that they provide investors an alternative path into explosive growth markets.
The truth is that when you buy [continue]….
Posted November 16, 2011 at 12:58 am
by David Sterman
When the going gets tough, the tough… break out their checkbooks?
After seeing stocks crater this summer, this is precisely what Warren Buffett did through his investment firm Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B).
Buffett and his team invested $7 billion in the third quarter. To put that in perspective, that’s more than twice the amount of buying he did just a quarter earlier and nine times the amount he bought in the first quarter.
You’d have to go back to the late 1990s to find the last time Buffett was so aggressive. (Back then, a global currency crisis led by the Thai baht and the Russian ruble put a temporary scare in more faint-hearted investors.)
The fact that stocks have been on the upswing since the fourth quarter that began in October tells you Buffett has already scored with his big buying spree.
The question for the rest of us is precisely what holds appeal to Buffett and his team right now, and how should this affect your next moves? Let’s take a look…
For starters, Buffett’s firm announced a big position — greater than 5% — in [continue]…
Posted October 26, 2011 at 3:34 am
The world’s cheapest stocks are located in its fastest-growing economies.
by Steven Goldberg
The recent stock market selloff inflicted pain almost everywhere. But, in a surprise to many on Wall Street, it caused the most suffering among investors in emerging markets — arguably the healthiest part of the global economy
Look at the numbers. From April 29 through October 3, Standard & Poor’s 500-stock index of mainly large U.S. companies lost 18.6%. Over the same period, the MSCI Emerging Markets index tumbled 28.1% So far this year through October 18, the S&P 500 has dipped 1.0% while the emerging markets index has plunged 17.8%
Investors opened their eyes to a host of problems that they had previously overlooked. Among them: The economic slump in the developed world has weakened demand for exports from developing nations.
Many emerging markets, notably China, are battling rising inflation, a process that’s slowing growth. Most emerging countries are rife with corruption. Corporate accounting is often opaque at best, fraudulent at worst. Governments own huge stakes in many companies; Russia, in particular, has a long history of hostility toward capitalism.
When will the bear market in emerging markets end?
Count on emerging markets to continue to move in much the same direction as developed markets — but to be much more volatile.
That’s how they’ve behaved, with few exceptions, for decades. At any rate, now is a great time to invest in emerging-markets stocks.
Posted October 21, 2011 at 3:00 am
by Charles Lewis Sizemore, CFA
Well, so much for a quick fix. German Finance Minister Wolfgang Schaeuble ruled out a “definitive solution” to the ongoing Eurozone sovereign debt crisis at the coming weekend summit, prompting a sharp selloff in global stock markets.
And adding an additional wet blanket to the fire of hope, the head of France’s central bank said that the European Central Bank’s bond-buying program would not be expanded. The ECB’s bond buying program had previously been one of the few coherent policy decisions coming out of Europe and a critical part of the effort to avoid crisis contagion spreading to Spain and Italy.
So much for that.
Like Nero two millennia ago, it appears that Europe’s modern-day Caesars are content to fiddle while Rome—and every other European capital—burns. And until these little Neros stop acting like pandering politicians and start acting like real leaders, the capital markets promise to be volatile.
Still, despite the muddle coming out of European capitals, something resembling a consensus is starting to take form. Greece is insolvent and will default (see “Three Greek Stocks to Consider After the Default”).
The focus has shifted from propping up Greece to managing the fallout on Europe’s banks after the inevitable default happens. If done correctly and in such a way that inspires market confidence, the damage will be contained. If done poorly and without adequate resources…well, say hello again to a post-Lehman 2008 meltdown.
All of their recent actions (and inactions) notwithstanding, I do not believe that Europe’s leaders are stupid enough to allow a disorderly meltdown. But until there is a definitive solution—what British Prime Minister David Cameron has called a “big bazooka”—expect the markets to be volatile, both to the upside and downside.
Hang in there, dear investor. Volatility is not something investors should [continue]…
Posted October 20, 2011 at 3:11 am
by Tracey Ryniec
Many investors play the “what if” game.
What if … you had bought Walmart shares in 1980?
What if … you had added Apple to your portfolio in 2002?
What if … you had bought almost any stock on March 9, 2009 – which was the Great Recession low- and which then soared?
What if... what if... what if.
It’s easy to look at the past and think you’ve missed out on an opportunity that will never come around again. There is only one Apple, after all. But what if similar opportunities were staring you in the face right now? Would you be open to seeing them and ready to act?
The Internet Is On Sale
The Internet stocks have always had an air of glamour about them. Remember toys.com or pets.com from the 1990s? Neither one survived the dot-com bust, but that didn’t stop investors from falling in love with the idea of a company operating solely off the Internet.
The new crop of Internet stocks, however, have one thing that the dot-com era ones didn’t have and that is profits. Today’s crop of companies actually makes money. In fact, they make lots of it.
In the last year, many of the favorite Internet stocks started rallying. Many of them double or tripled in value.
Some were saying that it was the dot-com boom all over again. P/E ratios soared to nosebleed levels, in some cases companies were trading at 100x estimates or higher.
And then August happened.
What was once “hot” turned “cold” and the stocks went into a free fall as investors dumped everything that they had profit in.