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Jim Trippon
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Jim Trippon is an Amazon.com bestselling business and finance author, a practicing CPA, and a fee based investment advisor. His portfolio of companies includes J.M. Trippon & Company CPA, Trippon Wealth Management & Trippon Financial Publishing. Jim has dedicated his business career to... More
My company:
Trippon Financial Research, Inc.
My blog:
Global Profit$ Alert
My book:
Stay Rich Forever: Retirement Planning Secrets of Millionaires and How They Can Work For You!
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  • How To Profit From An Emerging ETF Trend
    I'm willing to bet if you been following financial markets for the past year or two, you're acutely aware that investing in U.S.-government bonds really isn't worth the trouble. I'm not going to bore you with all the tired scare tactics that we've been seeing all too much lately. You know what I mean. Headlines like "Another U.S. Debt Downgrade Coming; Stash Your Money In A Mattress." Obviously, I made that up, but it's in the vein of some of the whacky stuff I've seen recently about investing in debt issued by Uncle Sam.

    I just look at things this way: The yield on 10-year Treasuries dipped below 2% again on Tuesday and if you're looking for something better from across the Atlantic, don't get your hopes up. Yields on 10-year U.K. gilts are barely above 2% while 10-year German bunds yield even less than equivalent Treasuries.

    That's the bad news. And it is bad news because a lot investors, particularly those that are planning for retirement, want fixed income exposure. Fortunately, there are options from a booming part of the ETF universe and I'm going to show you how to take advantage of this emerging trend.

    I'm talking about international bond ETFs. Moreover, I'm talking about ETFs with exposure to emerging markets. Just this week, and I'm writing this on Tuesday, PIMCO has introduced an Australian Bond ETF (NYSE: AUD) and announced plans for Canadian and German equivalents while Vanguard announced its foray into the international bond ETF game as well.

    In other words, faster than a Kardashian marriage are investors getting more and more choices when it comes to international bond ETFs. For a while folks would ask me about getting exposure to emerging markets bonds, I used to point them in the direction of the PowerShares Emerging Markets Sovereign Debt ETF (NYSE: PCY) and the iShares JPMorgan USD Emerging Markets Bond ETF (NYSE: EMB). These were kind of the pillars of the international bond ETF community.

    However, both include issues denominated in U.S. dollars, so if you want an emerging markets bond ETF that doesn't expose you to dollar weakness, you'll have to take your business elsewhere. One of the funds I really like for investors that want some Asia-Pacific exposure is the actively managed WisdomTree Asia Local Debt ETF (NYSE: ALD). ALD is actively managed, but its expense ratio of 0.55% is decent for an actively managed ETF and it features no greenback exposure. ALD's holdings are denominated in the local currencies of South Korea, Malaysia, Indonesia, Philippines, Thailand, India, China, Hong Kong, Singapore, Taiwan, Australia and New Zealand.

    For those that want to broaden their EM bond horizons, I also like the WisdomTree Emerging Markets Local Debt ETF (NYSE: ELD). Also actively managed with a 0.55% expense ratio, ELD features bonds denominated in the local currencies of Brazil, Chile, Colombia, Mexico, Peru, Poland, Turkey, South Africa, Russia, Malaysia, Indonesia, Philippines, Thailand, China, and South Korea.

    For a Latin American flair, try the Market Vectors LatAm Aggregate Bond ETF (NYSE: BONO), but I will tell you the bonds featured in BONO are denominated in dollars or euros.

    The investment case for this trio is simple. ALD's yield is barely higher than that of 10-year Treasuries, but the ETF has a far better chance for capital appreciation within your portfolios. Regarding ELD and BONO, they feature 30-day SEC yields of 4.82% and 6.03%, respectively. Sounds a lot better than Treasuries to me.


    Click HERE to learn more about the ETF Profit Report - An ETF Trading Service For Serious ETF Investors
    Voted the Most Accurate ETF Newsletter in the Country
    This newsletter has 14 open ETF positions in its recommended portfolio, with 30% in cash.
    All 14 are up in value, with an average gain of 14.52% over short time periods (the newsletter may change positions each week).
    In the list of 16 recently closed out positions, only one ended up with a loss.
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    For more information and archived issues, visit http://www.globalprofitsalert.com

    Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.

    Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph:

    This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com

    Nov 02 10:55 AM | Link | Comment!
  • Are Fears About China Overblown?
    Not a day goes by without something more negative being written or said about China. While we touched recently in an article about China's inflation, as well as its import-export trade situation, along with its prospects for a soft rather than hard landing in its economy, there are still plenty of China bears if not downright doomsayers. The most notable doomsayer and China bear has been Jim Chanos, the hedge fund investor who runs Kynikos Associates and is a vocal China critic. Chanos first came to prominence with his successful big bet against Enron in 2001, and he's been shorting China stocks for some time now.

    China Economy Slowing, But How Much?

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    Property Bubble And Debt

    Chanos has been on CNBC and was quoted in Bloomberg and other media outlets on his contention that China has significant off balance sheet debt related to the area of property and land speculation. Chanos, in a Bloomberg tv interview, said the Chinese central government doesn't directly have a lot of debt, but that it's the Chinese local governments who have invested in state owned enterprises, or SOEs, along with other borrowing entities, and that Chinese regulators "are trying to get their hands around this." Also, Chanos said that the Chinese central government is "trying to rein it in." He points out that China's central government implicitly must backstop this debt.

    The Underlying Problem

    Michael Pettis described in a New York Times article what the continued property and construction speculation by local governments investing through SOEs could mean. "At this point-at which China may have reached a decade ago-debt begins to rise unsustainably."

    Pettis goes on to point out that the underlying debt, not the indebtedness of the municipalities, is the key issue, that such an unsustainable debt burden will, when repayment difficulties become excessive, simply be shifted. This goes to Chanos' point about the central government ultimately being on the hook for the debt. Pettis warns also of the possibility of a sudden "explosion in contingency liabilities," where even liquidated collateral will not come close to matching the debts. There are further complexities to Pettis' arguments, but clearly the key is that he contends there is unsustainable debt, and that debt, no matter what its origin, must face a day of reckoning at some point.

    So, Will There Be A Collapse?

    Chanos, for his part, has emphatically said there will be a collapse, and that "It will be 1,000 times worse than Dubai." Now, renowned investor and long time China bull Jim Rogers, quoted in Digital Journal, famously said of Jim Chanos more than a year ago, "I find it interesting that people who couldn't spell China ten years ago are now experts on China." Perhaps that's the case of one quotable exaggeration deserving another, but Rogers' contention in a Forbes piece was that Chanos misunderstands the way the Chinese yuan and real estate work. While Chanos was short Chinese stocks, notably its banks, Rogers has been a noted bull on Asia and China. Chanos elsewhere said although he is bearish on China, he later retreated somewhat from his prediction of a total collapse, though maintaining that "the property slowdown has begun." He adds that what he sees as massive debt-he put the figure at 100% to 200% of GDP-"European type figures," will drag down China GDP and demolish growth.

    The Problem With The Doomsday Scenario

    Much of the scenario with the unsustainable debt premise relies on invoking the "shadow economy" and the admitted lack of visibility which would peg the debt figures at specific levels. Chanos' estimates of "100% to 200%" of GDP is more than a wide ranging figure; how much is the actual debt? Specifics here would be more helpful, maybe even critical for accurate analysis. Also, the contention that the Chinese banks, which are admittedly policy arms of Beijing, are going through a shoring up process similar to the massive infusions and write downs of the past when non-performing loans, or NPLs, were de rigueur in China, also doesn't show the evidence. The few millions recently invested by China Investment Corp, CIC, were by any measure the proverbial drop in the shoring up bucket. So the numbers, the facts, certainly don't confirm the scale or scope of what Chanos sees ahead.

    Food Inflation In China Is Real

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    Another View On China

    Stephen S. Roach, non-executive Chairman of Morgan Stanley Asia and a faculty member at Yale University, was recently on CNBC and said that the China doomsayers are wrong. Roach pointed out that China is managing its situation through globally treacherous economic waters well, and that not only is no collapse in store, a soft landing is on the horizon. Roach has written elsewhere, at project-syndicate.org, that while growth is slowing, the non-performing fixed investment problem will be manageable. The growing influx of rural population into urban areas will absorb some of the housing build up while the Chinese banks have the liquidity to absorb potential property losses. Inflationary problems, especially food inflation, still exist as a risk, and with the European markets slowing, China's export trade will be dampened. Some help will be gained by increased consumer spending, and economic rebalancing long term will take place, Roach maintains. He points out that successful "strategic transition" has been the hallmark of a developing China, and should continue to be. For us as investors, although we know Chinese ADRs have been hit hard, we still need to be careful but attentive to the opportunities that may present themselves.


    Click HERE to know more about the China Stock Digest: China Stock Market Research & China Stock Analysis
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    We've been in a global "Super-Cycle" for 10 years now.
    It's true. There's no denying it.
    Well... maybe not here in the United States. But certainly in emerging markets like China and India.
    The growth in the next 25 – 30 years in those two countries is almost too big to fathom.
    Hundreds of new millionaires will be made... and dozens of billionaires. Think about the enormous wealth created in the American Industrial Revolution... times 11.
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    For more information and archived issues, visit http://www.globalprofitsalert.com

    Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.

    Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph:

    This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com.
    Nov 02 10:50 AM | Link | Comment!
  • Trippon’s Market Commentary for the Week Ahead
    I realize it's Halloween today but on a serious note, many of us are wondering why the stock market has been more of a trick than treat to our investment holdings this year. After dropping roughly 25% from its value on the first of July, the US stock market indexes have rallied for the past three weeks straight on the hope that Europe would avoid full blown economic collapse.

    Yes a collapse in the European currency and banking system was, and still remains, a very real possibility.

    The announcement last week that the EU countries had agreed to write down 50% of the value of Greek Treasury bonds confirmed that at least some positive action to deal with this crisis in Europe is occurring. This, at least for the time being, has injected a shot of adrenaline to the stock indexes around the world including here in the U.S.

    As you will see below, these events may result in many of your portfolios requiring adjustment.

    Of course, the problems in Greece are not even close to being solved. One clear of the clearest indications of that all is not "baklava and ouzo" in the land of the Acropolis, is that the budget deficit in Greece continues to increase at an alarming rate (it is up roughly 15% year to date over 2010.) The other problem is that Italy, Spain, Portugal, and Ireland all also have problems paying for their federal programs and Treasury bonds.

    My view on the situation has been that when the financial markets have a serious risk of a major default, that serious caution is in order. Most of us agree that it is better to exercise restraint and caution than to risk massive personal investment losses. But doing so when the markets have rallied the last 3 weeks is pretty tough.

    So the million dollar question is... What's Next?

    The market action last week indicates that investors around the world want to rush back into stocks. This is a reversal to the market trends of the entire 3rd quarter of 2011. This means that a number of the investments you may have held in your portfolios over the past 3 months, particularly some of the most defensive holdings, will need to be exited.

    The most typical thing to expect next is the market will be entering a several week phase that professional traders call "consolidation." Consolidation is a fancy way of saying "stocks almost never just go straight up."

    As a practical matter it means that there is no reason to "panic sell" when exiting any defensive positions such as inverse funds in your portfolios. The type of movement we have seen in the past 3 weeks will generally be followed by several pull backs to test recent support levels. Translated into English... this means that it is more likely than not that the gains of the past three weeks will fade a bit as the market pulls back to confirm that a bottoming in the market from the rough patch we experienced in the third quarter has occurred.

    So as a practical matter, at this point two adjustments will be considered in most portfolios.

    First, if you have defensive investment positions, such as inverse funds you may want to unwind (SELL) those holdings as consolidation occurs. If you are holding any inverse or defensive positions that are not currently profitable, the consolidation process will generally provide an opportunity to sell those holdings at a profit as long as you do not panic sell.

    Second, you will want to consider beginning to accumulate those types of stocks that will most benefit from the classic rotation process that occurs during bottoming cycles. If we are now, as it appears likely, beginning the completion of this bottoming process, the time to identify the new holdings and begin adding them to your portfolios is NOW.

    As always, I will be working to make sure we do everything possible to identify risk and take advantage of market gains. This is precisely why our premium newsletters - Dividend Genius, China Stock Digest, and ETF Profit Report, are so helpful. These resources give the specifics on what our research says you should be buying or selling TODAY.

    The market is likely to remain volatile for the rest of the year. By remaining vigilant we will make the best of these challenging times.

    In the meantime I remain...

    Committed to your Global Profits,

    Jim Trippon
    Chief Investment Analyst


    For more information and archived issues, visit http://www.globalprofitsalert.com

    Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.

    Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph:

    This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com.
    Nov 02 10:20 AM | Link | Comment!
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