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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: Jack Jagernauth who wrote (10643)	3/29/2000 7:43:00 AM
From: OldAIMGuy	Respond to of 18928

Hey Jack, I couldn't figure out how to overlay the Nikkei with these graphs, but the three funds themselves may give a clue to why you're not seeing good correlation. siliconinvestor.com SJPNX is Japan Fund JOF is Japan OTC Fund JEQ is Japan Equity Fund As you can see there's not even correlation among these three funds. I had this problem with WEHKX in Hong Kong as well. I couldn't get good correlation with the Hang Seng, not on a daily basis anyway. The broad trend seemed to hold, however. Of these three, it would appear that JOF probably has greater volatility, and therefore maybe better AIM potential than the other two. My friend in Japan recently told me that he feels the smaller companies in Japan are starting to respond to the "New Paradigm" as recovery of their economy occurs. He feels the big companies will be slower to respond. I'll copy part of his email here later today. Best regards, Tom

To: Jack Jagernauth who wrote (10643)	3/29/2000 8:38:00 AM
From: Saul Seinberg	Read Replies (2) \| Respond to of 18928

Jack, Funds based on foreign markets have two main risks; market risk present in all countries and currency risk, a factor you can ignore with a domestic fund. Some, but not all, fund managers avoid currency risk by hedging. With a Japanese fund, that would mean trying to neutralize dollar-yen fluctuations through futures. Obviously, the cost of these futures detracts slightly from fund performance, but avoids downdrafts caused by large currency changes. Such fund managers feel that the relatively low cost of hedging currency more than offsets the pain and cost of suffering significant currency fluctuations. Other funds don't hedge. They simply hang in there and take their currency lumps. When a local index, such as the Nikkei moves up, but currency fluctuations move contra, your fund's NAV won't move up as much as the local index and could even move down in the face of a large opposing currency change. On the other hand, none of this may matter with respect to the fund you own; that is, there could be yet another factor at work. However, it would probably be worth your time to check on what your fund does or doesn't do with respect to currency risk. In addition, you can check on currency swings on the days you notice the puzzling moves you wrote about to see if that explains the seemingly contradictory moves. Hope that helps. Saul...