Could be.
Been nibbling on some stocks, mostly ADRs of select sectors and countries. While they don't move with the same gusto as the more popular large caps, they seem to be more fairly priced. It's also possible that interest will pick up in them if things don't fall apart.
One analyst recently cut the recommended allocation to foreign markets, reasoning that they tended to move in lock step with the US and no longer provide the diversification, suggesting rather that selective exposure to various sectors within the US could provide the lower risk profile. I believe they went so far as to reorganize their research staff along sector lines in global terms.
This could be a contrarian sign, capitulation on owning foreign shares. But it sort of fits with my thinking that the world can survive and prosper despite a US slowdown, and my recent experience in picking stocks based on out of favor sectors.
Recent choices; all minor positions
FFS New Zealand Forest/Lumber
NZT New Zealand Telecom
N Canada, Inco- Nickel/PGMS
DTC Canada, Lumber/Paper
WMC Australian Mining Concern
UU British Water utility
SASOY South African Energy/Energy Technology/Chemical
ELP Brazil Power Plant Construction
PNE Brazil Chemical
PCU Peru, Copper mining
Originally, I thought I'd be hedging against a weaker dollar in this manner, but N, for example, expects a hit to earnings if the canadian dollar strengthens. I can't quite get a handle on the calculation required to understand how N would perform if the US dollar dropped 15%. While their earnings in canadian dollars might be lower, the value of those earnings in us dollars would improve.
Of course, in a serious slowdown, base metal prices are going to drop and there may not be earnings. <g>
Brazil, I figured, would benefit against Argentina due to the link of the latter with the dollar. But Argentina would likely benefit from increased exports with a weaker US dollar for the same reason. So I'd be tempted to buy in Argentina, but I think after weakness is observed.
Most of this is not so well thought out, rather idle rationalization designed to allow me to take on stocks that I otherwise would probably ignore. |
