Global Stock Investor Hotline 32

Nicholas Vardy

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

So far, our fundamental investment thesis that global markets will have a strong Q4 seems back on track. Although the pullback in October was unnerving, many of your positions in high-risk stock markets like Market Vectors Russia ETF (RSX) hit highs for the year on Monday. Your commodity-related positions in Freeport-McMoRan Copper & Gold Inc. (FCX) and Market Vectors Gold Miners ETF (GDX) also have rallied to record highs, as the price of gold continues to soar. Yes, there will be pullbacks before now and the end of the year. But for now, enjoy the ride up.

The bigger challenge will come after the turn of the New Year, when global markets often pause for breath. That said, the now-firmly entrenched global economic recovery, combined with the relentless onslaught of global liquidity, may mean that this bull has longer to run. The current market reminds me of the time period following the collapse of the Russian market and hedge fund Long Term Capital Management in 1998. After that time of crisis, the Fed flooded the global financial markets with liquidity and, ultimately, helped blow the Internet bubble. And we all remember how that ended.

There is increasing concern that global central banks are doing the same thing this time around. But as long as you are aware of this — and stick to your stops — there is no reason not to take advantage of current opportunities in the market. With the era of “buy and hold” investing over, your Global Stock Investor portfolio may look very different six months from now than it does today.

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Portfolio Update

The WisdomTree Dreyfus Chinese Yuan Fund (CYB) was flat this week, even as China is getting increased pressure from the international community to revalue its currency. With the yuan undervalued by at least 40%, revaluation is a question of ‘when’ and not ‘if.’ CYB remains a defensive BUY.

Claymore/BNY Mellon BRIC ETF (EEB) rose 2.14% to hit a new high for the year. This diversified bet on the BRIC economies remains a BUY.

iShares MSCI Taiwan Index Fund (EWT) soared all the way to a high for the year of $13.12 on Monday, as China and Taiwan signed a memorandum of understanding which will allow mainland Chinese and Taiwanese financial and insurance firms to operate on each other’s territory. EWT remains a BUY.

SPDR S&P Emerging Markets Small Cap (EWX) hit a high of $47.60 for the year as a broad range of emerging markets rallied this past week. This leveraged bet on emerging markets remains a BUY.

iShares MSCI South Korea Index Fund (EWY) hit a high for the year of $46.15 as both shipping companies and technology stocks rallied strongly this past week. EWY remains a BUY.

Freeport-McMoRan Copper & Gold Inc. (FCX) jumped 3.37% this past week as record gold prices keep this position a BUY.

Market Vectors Gold Miners ETF (GDX) rose 3.76% this past week as the price of gold exploded to record highs, trading through the $1,140 per ounce level for the first time ever. A leveraged bet on the price of gold, GDX remains a BUY.

Market Vectors Indonesia ETF (IDX) bounced 5.4% this past week, as global investors rushed to re-embrace risk in their portfolios. IDX remains a BUY.

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Market Vectors Russia ETF (RSX) hit a high for the year of $32.26 yesterday, as the “risk trade” in emerging markets is back on. RSX remains a BUY.

SPDR Dow Jones Intl Real Estate (RWX) ended the week up, in line with other global emerging markets. This play on the global real estate recovery is a BUY.

Chemical & Mining Co. of Chile Inc. (SQM) hit a high for the year of $39.40 on Monday, before pulling back slightly. This relatively low volatility play remains a BUY.

iShares MSCI Turkey Index Fund (TUR) pulled back slightly in its first week in the portfolio. This is a good time to enter or to add to your position. TUR is 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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