Between the billions of dollars lost in valuations and the thousands of investors who simply said goodbye to the markets since September last year, nobody is quite sure how much of estimated $7 trillion of privately-held “offshore” wealth still rests in Switzerland. But Swiss banking insiders concede that their country’s claim to controlling 30% of the world’s “hot” money is certainly subject to debate.

And, any further deterioration in Switzerland’s status as a pre-eminent safe haven could seriously impair the profitability outlook for Union Bank of Switzerland (UBS), Credit Suisse (CS) and a number of elite private banks in Zurich, Geneva and Lugano.

Roberto Baggio (Seeking Alpha, September 24, 2009, Ten Reasons for an Imminent Stock Market Crashseekingalpha.com/article/163213-ten-reasons-for-an-imminent-stock-market-crash) wonders if someone has “waved a magic wand and fixed Europe’s problems overnight.” Well, in beautiful Riga, which lays claims to putting up the first evergreen Christmas tree in 1510, the holiday season is already in full gear; nobody in the historic city centre appears too concerned with the fact that Latvia’s economy is facing an 18% decline in 2010.

In fact, the “magic wand” was waved by the IMF and the EU who recently arranged a US$10 billion emergency loan facility for Latvia. Without that money, a significant devaluation of the Lat was inevitable. And, without doubt, devaluation in Latvia would have caused a chain reaction in the Baltics, renewed doubts over the health of more than a dozen Nordic banks and a renewal of uncertainty in other former Soviet satellites and states.

Below is a table in order of the sum of the 3, 6, and 12 month returns for individual country ETFs. Each column represents returns for various timeframes and the percent each ETF is above (or below) the 200 day moving averages as of the close September 30th. Note that all country ETFs are above their 200 day moving average. The top 5 based on the sum of the 3-6-12 month returns are below-- at the end of July 3, the top ETFs were China related. Last month we saw a more diversified mix of strength and the absence of China: TUR (Turkey), EWD (Sweden), EWY (South Korea), EWP (Spain), EWO (Austria). At the end of September, there is a resource theme - 3 of the countries in the top 5 are resource rich. The country ETFs with highest momentum are TUR, THD (Thailand), EWZ (Brazil), EWA (Australia), RSX (Russia).

One potential strategy investors could use would be to purchase the top ETFs based on the sum of their returns over 3, 6, and 12 months. Or, one could purchase ETFs based soleley on 6 month returns (a strategy featured on ETF Screen). An additional twist would be to only purchase the top performing ETFs if they are also above the 200 day moving average.

Below we provide our unique trading range charts for 21 major country indices. For each index, the light blue shading represents between one standard deviation above and below the 50-day moving average. When the price is within this trading range, it is considered to be in "neutral" territory. The red zone represents between one and two standard deviations above the index's 50-day moving average. Moves into or above the red zone are considered "overbought." Moves into the green zone (more than one standard deviation below the 50-DMA) are considered "oversold."

With the exception of a few Asian countries, most indices shown below are trading into overbought territory. China's Shanghai Composite is the only index trading below its 50-day moving average. Australia, Brazil, South Korea, Taiwan, the UK, and the US look to be the most overbought of the bunch. After trading in perpetual downtrends for nearly all of 2008 and the first few months of 2009, most countries have now been trading in solid uptrends for five months now, with only a brief pullback here and there. Brazil, China, Hong Kong, India, Malaysia, Mexico, Singapore, Sweden, Spain, South Korea, and Taiwan have all taken out their 52-week highs in recent months, while the rest still have a bit further to go.

Without empirical proof, I’ve often surmised that the higher a country’s effective tax rates (i.e., income-tax rates plus social-security contributions), the lower the country’s stock market appreciation. So I decided to check in on the hypothesis with a variety of country ETFs.

Italy, Sweden, France and Germany are among the most taxed. One emerging market makes that list as well… India. On the flip side, Spain, Japan, Switzerland and the U.S. are among the least taxed. The biggest emerger makes the least-taxed list as well… China.

Below is a table in alphabetical (ticker) order for the individual country ETF momentum and 200 day moving averages as of the close August 31st. Note that all country ETFs are above their 200 day moving average. The top 5 based on the sum of the 3-6-12 month returns are below-- last month 3 of the top ETFs were China related. This month we see a more diversified mix of strength and the absence of China: TUR (Turkey), EWD (Sweden), EWY (South Korea), EWP (Spain), EWO (Austria).

The spreadsheet has been posted in the right hand column along with several others under 'ETF & Timing Portfolios' on Scott's Investments and will be updated monthly.

As regulators continue to put pressure on global financial institutions to be transparent and aid in catching “income reporting evaders, ” how will global financial ETFs be effected?

Most recently, the Swiss government agreed to hand over private bank information of 4,450 American UBS clients to American regulators, putting a damper on Swiss banks’ secrecy policies. As a result, Swiss private bankers are turning their attention to emerging markets, such as Russia, Asia and the Middle East, stressing their expertise and financial stability, states Ghana Business News. The litigation and controversy is damaging the reputation of Swiss banks and is forcing the nation to draft up new treaties.

There were some substantial price moves today for many country and region funds. How do they look now relative to their 200-day simple moving averages?

The chart below shows the ratio of the price to the 200-day average, and the 100-day average to the 200-day average, for 35 country and region funds as of end-of-day August 17, 2009. (Click chart to enlarge.)

Below is the data for the individual country ETF momentum and 200 day moving averages. Note that all country ETFs are above their 200 day moving average. The top 5 based on the sum of the 3-6-12 month returns are below--3 of the top ETFs are China related so I put the second and third China related ETFs in parenthesis. The theme from this data? ASIA:

TUR (Turkey), GXC (China), (PGJ - China related ETF), EWS (Singapore), PIN (India), (FXI, also a China related ETF), THD (Thailand).

My initial working hypothesis (it will evolve, so bear with me) about investing in existing real estate (as opposed to new development) is that success is largely a function of successful financing. Just as a good banker knows that his job largely consists of borrowing at 3 (%), lending at 6 (%), and hitting the golf course at 3 (o'clock), real estate investors know that if you can just borrow low and rent high, the battle is half won.

Check out this chart from April's Economist. Among other things it shows that in Japan and Switzerland, house prices are more affordable than they have historically been, as expressed both by the price-to-rent and the price-to-income ratios. Both ratios are indexed to 100 rather than expressed in absolute terms, but it's a fair bet that in those two countries, cap rates are also higher than they have been historically.* High cap rates are the "lending at 6" part of real estate investing.

Over the past several months, concerns over the fallout from the massive stimulus plans, rising unemployment, and continued weakness in corporate earnings have left many investors rethinking their allocations to U.S. equities.

Once considered an essential element of any portfolio, American stocks have fallen out of favor with some investors who have shifted assets towards emerging markets and other regions (the number of ex-U.S. ETFs available is a testament to this trend). For investors disillusioned with prospects for American markets but unwilling to take on the risk inherent in emerging and frontier market funds, Europe may present an appealing option.

The structural problems facing the UK economy, however, are even more substantial than elsewhere. For one, the structural imbalances (overvalued housing market, over-indebted under-saving consumer, high current account deficit to name a few) are at least as pronounced as in the US, but the banking sector liabilities are significantly larger and the share of the financial sector is larger than in the US (with the added threat of tighter regulation of the financial sector pushing financial institutions out of the UK).

High risk and high return are generally understood to go together, but are there exceptions? Are there ways to find a higher return with a lower risk? The strategy described here is to select countries based upon a positive current account as a percentage of the countries own GDP.

Those countries with the highest current account are those countries most likely to weather the storm should world economies take a turn for the worst, because these are the countries with the most investment assets under their own control. If there is a market downturn, these will decline along with everything else, but if we start to see soverign defaults, I think these are the countries least likely to fail.

Saying it’s better to buy when securities are going up than when they are going down is easy. Actually determining what is up and what is down is not quite as easy.

We have said and wish to reiterate that you should buy makes good sense to own for fundamental reasons when it is going up and not when it goes down.

Yesterday we released a B.I.G. Tips report to our Bespoke Premium members taking a look at valuations, growth expectations, and stock market performance for more than 20 countries that have trackable ETFs. The report highlights which countries currently look the most and least attractive based on various characteristics.

One simple data set highlighted was the current P/E ratios for these countries. Below is a chart showing these valuations. As shown, Russia currently has the lowest P/E ratio at 6, followed by Italy (10) and France (11). At 14, the US is more attractive based on its P/E ratio than most countries. Taiwan has the highest P/E at 60, and the UK is surprisingly bad at 34. Its valuation is worse than China's. Germany also has a very high P/E ratio at 27.

Looking at country and region funds in terms of fundamental portfolio attributes, there are significant valuation differences which should be appreciated when making selections.

This chart presents key data from Morningstar for 45 country and region funds, and color codes the data in comparison to the total US stock market as represented by VTI.

Global factory activity continued to improve in May amid growing optimism that the worst of the recession may be over. Output contracted at a much less ferociously than at the start of the year in one economy after another, and this month three countries actually registered output growth - India, China and Turkey. The JP Morgan global manufacturing index (PMI) rose to 45.3 in May from 41.8 in April, the highest level in nine months, although still a long way below the 50.0 mark dividing growth from contraction. The component indexes for output and new orders were both running at much higher levels than in April.

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However, the headline PMI is still at a very low level by historic standards, and well below one which would be consistent with outright recovery. On the other hand, it is clear that the easing of the worldwide manufacturing recession which we have been seeing over the past two months has continued and has been substantial. The month-on-month gains in the PMI, output and new orders indexes in April and May are the greatest in the series history (which is not that surprising follow a series of record falls). All of the national indexes for these variables rose during the latest survey period.

Below we highlight our trading range charts of the major stock indices of 22 countries. For each chart, the light blue shading represents between one standard deviation above and below the index's 50-day moving average. The red shading is between one and two standard deviations above the 50-day moving average, and moves into or above the red zone are considered overbought. As shown by the charts, markets aren't just rallying in the US. In fact, equities have rallied more in most other countries than they have in the US since the March 9th lows. As you'll see below, every single country is trading in overbought territory, with Hong Kong, India, Taiwan, Singapore, Russia, and South Africa the most overbought.

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I am in awe of Obama. He has rocketed onto the national and international scene without a major error. He seems to be everywhere, and doing every thing he can to handle the worst crisis in generations. His actions appear to be unopposed in most areas.

But we need to exercise some care that we do not allow ourselves, in our awe of the man, to forget that we have security and stability because of the "Rule of Law" and there is no place for the "Rule of Awe"