Add Foreign Exposure With A Single Country ETF
The Dynamic Wealth Report
July 28, 2008
How To Make Extra Money On Your Summer Vacation
As an Investment Banker I learned quickly that vacations are a gift, not
a right. Because I was providing a service to my clients, their needs
came first. Every banker knows it and has had to cancel a
trip or two. I still remember the sting of having to give up my
tickets for a 10 day Hawaiian vacation – a client needed help on a high
profile merger.
After going through experiences like that I appreciate all the more the
vacations I do get to take.
More than 33% of Americans intend to take a vacation at some point this
summer. Some have been planning it for months; others take off on a
whim. Anyone with a job tied to the stock market knows the best time to
take a vacation is in August . . . specifically the last two weeks of
August.
Why Then?
For some reason, most fund managers and institutional investors are
willing to part with their trading terminals at the end of August. It
means the smart money is working harder on their tan than the next great
stock pick. I know it seems strange but it’s really true. Trading
volumes on all of the markets shrink. The amount of research from the
investment banks is reduced. And it seems even financial news slows at
that time of the year.
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A summer vacation is a great opportunity to disconnect from the markets.
It’s a chance to step back and reflect. It’s a chance to expand your
research horizons and explore new places. It’s an opportunity to see
things you normally wouldn’t see. The biggest benefit . . . you might
find an interesting investment idea along the way.
Let me give you an example.
Everyone knows there are four big developing countries in the world:
China, India, Brazil, and Russia. A summer vacation is a perfect
opportunity to see these countries first hand. It puts investing in
China in a different perspective. A unique perspective when you’ve seen
the growth and the thousands of new construction sites in their largest
cities.
If you’re really adventurous, you can also explore other lesser known
countries. Some of these might even prove to be your best investments
yet.
Take a quick look at Thailand. Last year more than 15 million tourists
visited the country.
All of them witnessed the same thing. Thailand’s growing economy. This
economy is expected to grow a robust 5% to 6% in 2008. Compare this to
the paltry less than 1% growth rate of the US and you can see why
investors get excited. The country is developing their infrastructure
and the government has started enacting a series of serious tax cuts to
spur further growth.
Thailand’s stocks are trading at some of the lowest P/E ratios. Their
market is off its highs by more than 20% this year . . . and many people
see this as a buying opportunity.
But there’s a risk or two.
Despite its high growth rate, the country still shows some instability
in government. In 2006 Thailand experienced a military coup. The Prime
Minister Thaksin Shinawatra was overthrown for alleged corruption and,
get this, disrespect to the Monarchy.
In December 2007 the military restored democracy and held elections. The
removed prime minister won in a hotly contested election that many feel
was rigged.
Despite his win, he is still on trial for corruption charges. This
government uncertainty has weighed on market valuations. But every dark
cloud has a silver lining.
These risks have scared away a number of investors. Investors who will
return over time buying back into the market they so quickly exited. If
you have an iron stomach, take a look at Thailand. Better yet . . . use
your summer vacation to go explore the country. You might find an
investment opportunity that turns your summer vacation into a real money
maker.
Investing the easy way.
Don’t have two weeks or the extra cash to spring on an international
trip? Do a bit of research on the country. Then look at the
IShares MSCI
Thailand Investable Market Index Fund (THD). It’s a new fund that was
just introduced. It holds 73 of the top companies operating in Thailand. A company’s inclusion is based on a number of factors including market
value and available float. With an expense ratio of 0.68% it’s an
inexpensive way to capture the growth opportunity in Thailand.
• Health Care Index (Up 4.9%)
The Heath Care index has been breaking into the top industry performers
group not only over the last week, but also over the last month. This
may be the start of a secular shift into defensive healthcare related
companies.
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