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Herman,
>again: your posts have no context: no idea what this refers to.
I like to top post, with added relevant paragraphs for important
points.
For some reason, when I reply to your posts the content of your post
is not copied across to the reply.
Also - I am a well developed intuitive so, if the environment is
right (not emotionally peturbed) I know what 'my answer" is almost
instantly (in this case I didn't read beyond the first paragraph
because I knew there was nothing in there for me).
I am that used to it and know that I can rely on it for 95%+ accuracy
that I don't bother going into the detail, unless I want to explain
it to someone else (for my own use I only detail the conceptual
aspect and don't need the ratiocinated flow chart).
I do get a bit mentally lazy/tired, in the forum and sometimes I just
give out the answer without explanation (ratiocination is like
walking when you can fly there in a helicopter).
I was referring to points made in articles that you linked to:
message # 125041 maketwatch.com
# 125042 money.cnn.com
examples from those links:
# 125041 marketwatch link
Schwab's Center for Investment Research argues that an individual
investor should only be investing in individual stocks in the first
place if they can afford to buy at least 30 to 40 different stocks to
obtain adequate diversification. The foreign component would
necessitate additional sophistication beyond that, so Schwab believes
the smaller retail investor still may be far better off in investing
in ETFs or mutual funds to get that diversification.
# 125042 money.cnn.com
"(FORTUNE Magazine) ? PREVALENT among U.S. investors not so very long
ago was the illusion that putting money into foreign securities was
only for daring risk takers. But in recent years more and more
Americans have come to understand that having part of your stake
invested abroad is prudent, lessening risk rather than increasing it.
Taking a global view paid off for investors during the Eighties and
should pay off during the Nineties too. It should work well even if
growth over much of the globe is slower in the Nineties than it was
in the Eighties, as many seers expect. The case for going global is
virtually independent of economic forecasts. Diversification's virtue
is well established, and investing abroad adds an element of
diversity, across national boundaries. Despite all the
interconnectedness of national economies, some will be doing better
than others at any given time, so having stakes in several countries
spreads your risks. It is pretty certain, moreover, that some
countries will grow more vigorously than the U.S. during the
Nineties. Accordingly, there is a good chance that an American with
well-chosen investments abroad will get larger overall returns than a
stay-at-home investor. While the U.S. stock market did very well for
investors in the Eighties, quite a few stock markets abroad did even
better."
"Quite another species is the closed-end mutual fund. Restricted in
scope to stocks of a single nation or geographic region, such funds
have a fixed number of shares, which trade on U.S. and European stock
exchanges. At times, eager demand can lift prices of these funds'
shares to premiums well above the underlying market value of the
portfolios".
"Moreover, European companies are raising their traditionally skimpy
dividend payouts."
Re dividend payouts:
Some countries/stocks historically pay dividends more than others
and/or have more stable earnings growth.
I have no doubt that filtering by "stable earnings growth" will
return above the group. Some traders in this forum have said that
they trade successfully by selecting fundamentally sound stocks and
then applying their favourite technical signals to that filtered
group.
I have no reason to doubt their testimony (refer to Dr John Price -
Conscious Inversting).
Re investing in different countries
This has its own different risks, as mentioned in article.
I am sure that people can do well with this if they specialise in the
method.
It is not for me because if we are going to predict movement then
statistically when can expect to be right 50% of the time.
If a trading method is based on long term trading/prediction then we
have to wait a heck of a long time to prove we are right and/or
recover if we are wrong.
Example:
Go to Yahoo finance (US)
enter BHP.AX >> quotes to open the interactive chart
click on compare >> enter ^AORD >> select >> select US indexes to
compare
>> select 5 year chart
The ASX outperformed the US market by 100% in the prev 5 years
AND BHP outperformed the ASX by 300% approx (I am guessing these
numbers).
Then go to YahooFinance >> Investing >> currencies
enter USD in the top box (currency convertor)
enter AUD (aussie dollar in the bottom)
click on convert
click on the chart to maximise and go to a 5 year chart
The US dollar devalued against the AUD by around 100% in the same 5
years (or something like that).
Putting them together at least one guy won the lottery in that
period, using only Yahoo in a local library).
BUT!
Will it continue?
I can't predict the future movement of the AUD or BHP!
If I was a US trader, and climbed aboard that trade now, and we have
another 5 years like that then great - if we don't how old will I be
before I recover financially?
IMO that is taking an unnecessary unmanageable risk i.e. those
things are out of my control.
Re diversification == invest in different markets
What is diversification?
Isn't non-correlation the way to quantify diversification?
That is what I meant when I said that these are old world investment
concepts.
brian_z
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