The best-performing Global Bull Market for 2005 was Egypt (up 114.5%), followed by Colombia (up 102.2%) and Russia (up 85.8%). Look for next year’s top performers to generate similar rates of return.
There are three important lessons to be learned from this year’s results as we look ahead to a strong 2006:
First, no matter how solid the underlying market, picking the right stock is crucial. Individual stocks outperform their markets significantly over certain periods. Irish biomedical company Elan (ELN) was the year’s biggest loser in Business Week’s Global 1200 — a ranking of corporations worldwide by stock market value — plunging a whopping 462 places. Yet Global Bull Market Alert generated some 128% profits over a short period on Elan by getting the timing on its recovery right.
Second, ignore the cover stories in financial publications about the "hottest" markets. The "China Boom" was on every magazine cover in 2005. Yet China had the second-worst performing stock market in the world in 2005, down 10.5%.
Finally, remember that when you invest globally, you are investing in the currency as well as the stock. It doesn’t matter how much money the locals are making if you’re not making money in dollars. A weak Euro is the reason why U.S. investors have seen a less-than-10% return in dollar terms on their investments in "Old Europe," despite the major market indices being up over 25%.
We were stopped out of Banco Bradesco (BBD) last week with a small gain.
Indian internet company Sify (SIFY) continues to shine with the stock up just about 20% since Dec. 12, and our remaining options are up 133%. As with all internet stocks, hold on for a volatile ride and move your stop price up to $8.35.
Japanese financial giant Mitsubishi UFJ (MTU) has been a strong performer recently, thanks both to the roaring Japanese market and a strengthening yen. We took a profit of 56% on half our MTU options last week.
Israel based Teva Pharmaceutical (TEVA) announced last week that it expects to close its purchase of fellow generic drug maker Ivax Corp. on Jan. 12, creating the world’s largest generic drug company. This should help propel the stock upward.
A record number of public offerings are on tap for China in 2006, providing the stimulus to the Chinese market that should break China Mobil (CHL) out of its current trading range.
Both our Latin American cellular phone plays, America Movil (AMX) and NII Holdings (NIHD), are reaching oversold positions and will bounce nicely into the New Year.