Monday, December 29, 2008

January 2009 Super New Year Pick

Okay, so there's nothing particularly special about this month's pick. But I would like to take the occasion of the new year to remind my readers that the intended holding period for picks for the Fleabagger Portfolio is at least two years unless otherwise noted. The losses in NDAQ, CDE, and other TFP picks are still likely to be more than made up over the next 18 months or so.

Unlike my other picks, this is not the common stock of an individual company. This is an ETF. ETF stands for "exchange-traded fund," and ETF's are, as Ric Edelman points out, the best way for an individual with little time on his hands to invest his long-term savings. For an unstudied investor, you would want ETF's that track broad domestic and foreign indexes (like the S&P 500 and the MSCI EAFE, respectively), as well as commodity ETF's and perhaps even bond ETF's, and you would want to rebalance them every year or two, and you'd probably do all right.

The Fleabagger Portfolio is not the unstudied investor, however. It is the aggressive young investor seeking maximum return over the next two years, based on observable phenomena in the global economy. It is also rapidly becoming more convinced of the need to invest overseas.

Particularly worthy of notice are foreign markets that are relatively free, enjoy low (or no) inflation, and have strong mining, agricultural, or manufacturing sectors. Markets like Australia, with its relatively laissez-faire government, sound fiscal policy, and strong mining sector. Fortunately there's an ETF that tracks the good market in Australia without dross like Europe. Its symbol is EWA, and it's more than 50% off its 52-week high, and near its 5-year low. This is ridiculous, because Australia's miners and the banks that support them are likely to thrive in the hyperinflationary/recessionary environment I expect for the U.S. in 2009-2010, especially because East Asia's economies probably won't stop producing just because the U.S. stops buying. They'll just sell to richer countries, like, say, Australia.

This pick, I'll admit, comes a little late. I intended to post this last year (that is, this past Monday) when EWA was in the low $13's. Now it's over $14, but it's still a buy anywhere below $16.

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