Mad Hedge Fund Trader

Emerging Markets ETFs Still Have Room to Grow

nbd ) If someone mentions the word “decoupling” to you, turn around and walk away, delete their number from your Blackberries and I-Phones, delink from their Facebook page, and block their Tweets and e-mails. Knowing this individual will be seriously injurious to your wealth. When the stock market rolls over, don’t expect to be able to hide anywhere, except in cash. The way all assets classes simultaneously piled into the “down” elevator at exactly the same time last week is proof of how highly correlated markets are these days. The causes are mega hedge funds with newly tightened risk controls and itchy trigger fingers, vast quantities of stock electro shocked by computer algorithms, and too recent memories of the bloodletting earlier this year. I have always viewed diversification as a great way to lose more money in varied places with more exotic sounding names. Remember the old saw that when America sneezes, the rest of the world catches cold? Now when the US says “katchoo”, the everyone else catches the H1N1 virus, AIDS, and the bubonic plague. The US has become on the canary in the coal mine that warns of deadlier global contagions. There is really only one trade these days. Is the world getting better, or not? Only the volatility will vary across instruments and countries. As much as I love China (FXI) and commodities for the long haul, when the US markets drop, I expect them to plummet twice as fast.

Vietnam: Asia's Sleeping Tiger?

Good piece. If you think that the place where China does its offshoring would be a great investment, you’d be right. Vietnam has been one of the top performing stock markets this year, its index rising by an amazing 85%. It was a real basket case last year, when zero growth and a 25% inflation rate took it down 78% from 1,160 to 250. This is definitely your E-ticket ride. Vietnam is a classic emerging market play with a turbocharger. It offers lower labor costs than China, a growing middle class, and has been the target of large scale foreign direct investment. General Electric (GE) recently built a wind turbine factory there. You always want to follow the big, smart money. Its new membership in the World Trade Organization is definitely going to be a help. Remember what happened when China joined the WTO? Until now, the only way to get involved with this country was to go through the tedious process of opening a local currency brokerage account, or buy a region sub emerging market ETF. But now there is a vehicle to get in and out of this ultra emerging market easily, through the London listed Vietnam Opportunities Fund (VOF.LN), run by Vena Capital Management. I still set off metal detectors and my scars itch at night when the weather is turning, thanks to my last encounter with the Vietnamese, so it is with some trepidation that I revisit this enigmatic country. Throw this one into the hopper of ten year long plays you only buy on big dips, and go there on vacation in the meantime.

The Impact of a Global Recession on Asia

First, Mr. du Plessis, I have been studying your work and I really admire it. My blast for today: The Chinese government has expressed “concern” about the safety of their $696 billion investment in US Treasury bonds. What they are not telling you is that they are even more “concerned” about the hundreds of billions of Fannie Mae, Freddie Mac, GMAC, and other agency debt, which is either now untradeable or has gone into the toilet. And “concerned” they should be. Not only is some of the paper they own now worthless, there is an impending 50% devaluation of the dollar in the cards which is the guaranteed result of current US government printing press policies. One of the great luxuries of running a dictatorship is that you can skip mark-to-market accounting. The government entities that own all of this garbage are carrying it on their books at par because they intend to hold it to maturity. If China used mark-to-market they would have plunged into another civil war by now. Expert to hear more “concerns” from Japan, Singapore, and the sovereign wealth funds that are in the same boat.