Global Stock Investor Hotline 27

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This past week was one of consolidation for your Global Stock Investor portfolio, with most of your positions pulling back slightly. That said, your bets on Vectors Russia ETF (RSX) and India’s ICICI Bank Ltd. (IBN) ended the week higher, suggesting the appetite for risk among global investors is still strong. Curiously, the Shanghai stock exchange is down 7% this month and is coming off of its worst quarter this year.

My investment thesis for the coming quarter remains unchanged. I expect that global investment committees in New York, London and Hong Kong will be huddling in conference rooms over the coming few weeks, cobbling together their investment strategies for 2010. Having been burned twice — both on the way down, and on the way up — they are undoubtedly feeling edgy. Nevertheless, I expect that they will be dipping their toes back into the world of global stocks, providing the support for a sustained rally.

In fact, one long-term effect of the financial crisis may be that exposure to global stocks and investment themes will grow permanently. True, the benefits of diversification are not as good as advertised. Safe havens disappear precisely when you need them most. But the relative resilience of developing economies compared with Europe and the United States also argues that global investing must become more mainstream. And it’s hard to beat the simplest, most unassailable reason for investing in global stocks. To appropriate John Dillinger’s observation about banks: "That’s where the money is."

So, this is a time to enjoy some solid gains in your portfolio. It’s also the time of the year to step on the gas. If that seems hard to do after such a big run up in the market, keep this in mind: The best investment decisions are the hardest ones. It’s when headlines are trumpeting a cloudless, rosy future, (think “Internet mania 1999”) that you should be worried. But today, you see mostly skepticism in the media. And that’s good news for your stocks.

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Remember, though, it is easier to make money in the stock market than to keep it. That’s why the stop prices that I recommend on all of your positions are at least as important as the recommendations themselves. And always make sure you place your stops as soon as you buy any Global Stock Investor recommendation.

Portfolio Update

The WisdomTree Dreyfus Chinese Yuan Fund (CYB) was flat again this week. This managed currency remains a defensive BUY.

iShares MSCI Taiwan Index Fund (EWT) fell back from its high of the year. But with Taiwan closely linked to the booming tech sector, EWT remains a BUY.

SPDR S&P Emerging Markets Small Cap (EWX) fell this past week, but seems to be recovering. I expect this small cap bet will be hitting record highs within a week or two. EWX is a BUY.

iShares MSCI South Korea Index Fund (EWY) pulled back slightly this week. With the Korean economy recovering quicker than expected, EWY remains a BUY.

Freeport-McMoRan Copper & Gold Inc. (FCX) dropped back this week on the weakening copper price. This is one to keep a special eye on. But with the long-term trend intact, your bet on “Dr. Copper” remains a BUY.

ICICI Bank Ltd. (IBN) ended the week higher, closing at a high for the year of $36.34, after Bank of America boosted its share-price forecast for the Indian bank. The bulls are in control in India, and I expect this market to be one of the strongest in the coming quarter. IBN remains a BUY.

Market Vectors Indonesia ETF (IDX) fell slightly this week in sympathy with other global emerging markets. The “new BRIC” remains a BUY.

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Market Vectors Gold Miners ETF (GDX) pulled back from its record highs last week, as the price of gold corrected below the $1,000 level. Gold is set to rise for the fourth quarter in a row in the July-September period, climbing almost 8% and marking its strongest performance since it gained 9.9% in the January-March quarter of 2008. GDX remains a long-term BUY.

Market Vectors Russia ETF (RSX) bucked the trend in global markets to rise slightly this past week. Russia tends to perform the best in Q4 of every year. RSX is a BUY.

SPDR Dow Jones Intl Real Estate (RWX) pulled back slightly but has since resumed its uptrend. I expect this bet on the rebounding global real estate sector to perform strongly in Q4. RWX is a BUY.

Chemical & Mining Co. of Chile Inc. (SQM) was flat for the week, and is showing uncharacteristic strength versus its emerging market rivals. SQM is still a BUY.

P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy.

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Global stock markets pulled back slightly in the second half of last week, and Asian markets are trading lower in this morning's trading. Most of your Global Bull Market Alert picks are now oversold on a short-term basis, making it a good time to enter or to add to your positions. Although I hope that September will end strongly with the help of a bit of "window dressing" by portfolio managers to boost their end-of-quarter numbers, a few days of weakness in the markets does not

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