Breakout

Where in the world to invest in 2014

Jeff Macke
Breakout

If you want to own stocks but the United States' slow growth economy, economic malaise and inept politicians scare you there are alternatives. In the attached clip David Garff of Accuvest runs through three of his favorite foreign markets U.S. investors can get long via ETFs for some foreign exposure. As an added bonus he throws in one country he's short.

First his long ideas:

1. Japan
The Nikkei 225 (^N225) may be up more than 50% but Darff thinks there's more to come for nimble investors. He thinks the fundamentals are still good, the valuations are OK at about 16x earning and the momentum is undeniable.

2. China
Where the Nikkei is a tranquil uptrend, the iShares China Large-Cap ETF (FXI) is pure chaos. It's down about 5% over the last year with a more than 30% price range from bottom to top. Garff says the communists running the country are getting their act together in terms of controlling the massive Chinese economy. Not that anyone could tell for sure given the Chinese government's rather casual approach to financial accounting.

"You get numbers rather than data from China," concedes Garff. He does maintain that the Chinese at least get the direction of the economy correct, making apple to apple comparisons possible.

3. Russia
At this point Putin doesn't even pretend not to revel in American missteps. He's a strongman trying to restore the pride of a once strong nation. He's also fairly corrupt with a nasty habit of taking over Western investments as the opportunity moves him as nicely illustrated by the grotesquely drawn out battle the country is fighting with BP.

Garff says Russian shares (RSX) trade at Dictatorial Strongman discount, noting "you can buy the average Russian company for five times earnings or four and a half times forward earnings." Western companies can sell their stakes in Russian joint ventures either willingly or with a gun to their head.

The Short: Chile
Everything about Chile is bad. "We're short it in a long/short portfolio but avoiding it is just fine, too".

 

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