Using Asset Allocation to make money in a Flat Market: gold & Latin America

» 2win - gold & Latin America

In response to message posted by Kirk:

I guess you could say I'm a reluctant long-term bear, not wanting to miss momentary rallies as they come. My interest in gold dates from the Y2K scare, when I wrongly expected a cataclysmic jolt to investor confidence would drive many to the safety of gold. That was a bad assumption, needless to say. But during the last year, gold has usually provided a good safety net, compensating for market downturns. So I'm not a long-term gold bug by conviction, but as a pragmatist have capitalized -- as well as lost -- on it. You'll notice my tradeable funds are out of gold now, since I locked in gains by moving to equities on about three different dates; and the exposure to gold in my intermediate-term has been reduced. When/if it comes down below where I sold, I'll try it again. Given the weakness of the dollar, I do expect gold to continue its upward trend.

As for Latin America, I feel there has been an overreaction to the election of the leftist president, Lula. American investors are scared to death of him. Unfortunately, that is true of the Latin America fund I chose.

But the new president of Brazil has too many alliances with moderates to make any drastic, menacing changes. His cabinet appointments and repeated pledges to honor foreign debt (and other market-friendly statements) are a bright green light for investors to take advantage of an undervalued market. Henrique Meirelles, a former president and COO of Bank Boston, is now president of Brazil's Central Bank -- (rough equivalent of the Federal Reserve Board).

If Lula had been elected on his first try, he would have been dangerous. But this was his 4th attempt. He has mellowed; his once-radically marxist philosophy has morphed into an innocuous hybrid one. He has brought new hope and optimism to Brazil, and I believe this will be reflected in Bovespa, their stock market.

-- posted by 2win