Food for thought
The Brazilian and The Russia ruble devaluation comparisons. Going into the open on August 17, 1998, the S&P futures contract had fallen 10 points below "fair value" on news of ruble devaluation. However, Index futures rallied sharply off their lows and the market opened just slightly lower. Buyers materialized throughout the session, by the end of the day lifting the Dow 150 points, the Nasdaq 28 points and the S&P 21 points. With the Dow extending gains to close +140 the next day, it appeared that U.S. equity investors had completely discounted the Russian situation.
Does this sound like yesterday?
Within two weeks of the devaluation, the U.S. equity market suffered two of the worst point losses in its history, as investors around the world began to consider the potential ramifications of the Russian devaluation (including loan defaults, flight of capital from lesser-developed-countries and increased currency speculation). On August 27 and August 31, the Dow plunged 357 and 512 points, respectively.
I have been concerned about the Brazilian and LatingSAmerican valuations since last fall. I am even more so concerned now and fully anticipate a correction before the end of the month. Brazil is the 8th largest economy on the planet. I will probably be concentrating a lot on mutual funds over the next couple of weeks, so bear with me if I post that occasionally for those who have asked me to. My intent is to move another portion of my IRA/401k/mutuals to safer geound today or tomorrow, so that I will only have about 35% left in stock funds. It takes a while for me to do this, so I tend to be a little cautious and early.
I have found that better than being a little late.
lastshadow |
