Global Stock Investor Hotline 29

Nicholas Vardy

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

The skepticism about the market rally remains relentless, even as almost all of your positions in your Global Stock Investor portfolio — including the iShares MSCI Taiwan Index Fund (EWT), Market Vectors Russia ETF (RSX), SPDR S&P Emerging Markets Small Cap (EWX), ICICI Bank Ltd. (IBN), Freeport-McMoRan Copper & Gold Inc. (FCX)iShares MSCI South Korea Index Fund (EWY), SPDR Dow Jones Intl Real Estate (RWX), Claymore/BNY Mellon BRIC ETF (EEB) and the Market Vectors Indonesia ETF (IDX) — hit highs for the year this past week.

At some point, the market will turn. But I continue to believe that it will not happen until we move into 2010. This is due to a potent cocktail of improving economic data; soaring global liquidity; institutional investors who fell behind the curve allocating money to risky assets; and the relentless “wall of worry” and skepticism with which the market rally continues to be received. 

The Market Vectors Gold Miners ETF (GDX) is the only position that has pulled back slightly, and offers a particularly good entry point. I expect that your high risk, high return positions like Market Vectors Russia ETF (RSX) and ICICI Bank Ltd. (IBN) are likely to be top performers between now and the end of the year.

On a personal note, I’m heading out for the weekend to Moscow, where I have not been for several years. It will be interesting to see if the place is still as rough and tumble as it was a few years back. Though last year it was home to more billionaires than London or New York, I suspect it hasn’t changed much.

Also, here is a video put together by my friend Bill Browder who was once the biggest foreign investor in Russia but has been banned from entering the country for the past four years. Don’t let this dissuade you from holding on to your position in the Market Vectors Russia ETF (RSX). Not only has it been a top performer, but also your presence in Russia is completely virtual, and you can exit at the click of a mouse.

My neighborhood in London is now crawling with Goldman Sachs employees bidding up properties to never before seen heights, sounding the death knell to the minor property bust in the Royal Borough of Kensington and Chelsea. After all, the average Goldman Sachs employee is taking home a bonus of $700,000 this year — or about $3K per working day. The people in the “front office” must be pulling in at least three times as much. As the economist John Kenneth Galbraith observed, “The financial memory is very short.”

Portfolio Update

The WisdomTree Dreyfus Chinese Yuan Fund (CYB) was flat again this week. Chinese central bank Vice Governor Ma Delun warned that expectations for a stronger yuan are boosting inflows of capital to China. The yuan remains a defensive BUY.

Claymore/BNY Mellon BRIC ETF (EEB) hit a record high of $42.93 on Monday. This diversified bet on the BRIC economies remains a BUY.

iShares MSCI Taiwan Index Fund (EWT) hit a high of $12.62 for the year on Monday before pulling back. Taiwan’s Central Bank kept interest rates at a record low of 1.25% and hinted that Taiwan may be one of the last in the Asian region to raise rates. EWT remains a BUY.

SPDR S&P Emerging Markets Small Cap (EWX) fell back slightly after hitting a record high of $47.00 last week. This leveraged bet on emerging markets remains a BUY.

iShares MSCI South Korea Index Fund (EWY) hit a high for the year of $47.68 last week before dropping back. Technology stocks fell, but LG Electronics bounced back on solid third-quarter earnings and auto stocks advanced. This is an excellent time to add to your position. EWY remains a BUY.

Freeport-McMoRan Copper & Gold Inc. (FCX) rose 3.14% over the past week, hitting a high for the year of $79.00. With the price of copper recovering and gold near record highs, FCX remains a BUY.

ICICI Bank Ltd. (IBN) ended the week flat, after hitting a high for the year of $41.24 on Monday. With foreign investors pouring over $9 billion into the Indian market so far this year, IBN is a strong momentum play and a BUY.

Market Vectors Indonesia ETF (IDX) hit a high of $63.23 on Oct. 19 before pulling back slightly. The consensus among analysts is that Indonesia’s economy will eventually return to an annual growth of 7-8%, the rate it managed before the onset of the Asian financial crisis. The “new BRIC” remains a BUY.

Market Vectors Gold Miners ETF (GDX) has pulled off its record highs last week, along with the gold price. Any pullback is an opportunity to add to your long-term position here. GDX remains a BUY.

Market Vectors Russia ETF (RSX) continued to power ahead, and hit $31.92 on Monday. The bad boy of emerging markets remains a BUY.

SPDR Dow Jones Intl Real Estate (RWX) hit a high for the year of $37.38 yesterday, as it has recovered from its pullback in the past two weeks. This play on the global real estate recovery is a BUY.

Chemical & Mining Co. of Chile Inc. (SQM) is still locked in a narrow trading range. I do think that your short-term upside is higher with almost any other pick in the portfolio, with the exception of the Chinese yuan (CYB). With that caveat, I am keeping SQM as 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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