For the last couple of weeks the tone to many of the blog posts has been more constructive on the market than I’ve been in quite a while. I’ve even responded to the last two TickerSense Blogger Polls as bullish.
I am far from all in as discussed at length in this week’s video but down 40% is a good time to start looking here and abroad.
As I try to look forward it seems that, repeat idea coming here, the US is closer to a secular event while many countries, ex-Western Europe and Japan, have more cyclical issues.
The implication of this theory is that the countries that are only in cyclical downturns will begin to comeback faster than countries dealing with more secular issues. A couple of places that might be in the club are Norway, Chile and Israel. Not quite making the theoretical cut include the US and maybe Korea. I wrote negatively about Korea on Friday at Greenfaucet and they made more news this weekend.
I’ve never owned Korea and I’m not sure how popular it has been as an investment destination.
Another repeat point is that I’m not focused on trying to correctly buy a bottom just trying to recognize the panic that has been created and lean a little against that panic.
Another segment to possible favor could be stocks with must own long term themes. This gets to be fairly subjective but to get the dialog moving a little this list might include infrastructure (projects that can get funding), alternative energy and aging baby boomers. None of these are new, they have all had fits and starts but the money is going to be spent eventually.
One last idea for this post is absolute return. There are plenty of products to research. Some have done well during this bear market and some have not. I have had good luck with the Rydex Managed Futures Fund [RYMFX]. It had a rough stretch for a short while when crude oil started to roll over but the methodology took oil out and the fund is a couple of percentage points from its all time high.
Unfortunately for some folks these types of ideas do not lend themselves to broad based index funds. While broad based has never been my first choice the scenario I am laying out means slower average growth for US equities (something I have been theorizing for a while now)–this can’t be shocking as we’re down on the decade.
So if the US averages 5% for some extended period you could either double your savings rate or seek out “normal” returns elsewhere.