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Even more on the I fund
- Thread starter Wheels
- Start date
vectorman
Active member
imported post
tsptalk wrote:
tsptalk wrote:
What do you think Tom, can we did put a little more faith in the I fund? I read how some sound like they're really scared of the I fund. At timesI think the S fund would be more scarey. When the S fund falls it usually takes a bigger hit than the I fund.:?
Mike
Active member
imported post
I think people in the I fund may find this article interesting... and given the information presented in it, I believe I'll continue lightening my exposure to the I-fund over the next two weeks.
Foreign-stock bubble may burst
[size=-1]GAIL MARKSJARVIS[/size]
Investors have a knack for trotting off to stocks in foreign lands during the worst of times. This might be one of those times.
Newscasts are filled with doom-and-gloom stories about the falling dollar and hype over the benefits of investing abroad as an easy remedy. So, investors are pouring money into foreign mutual funds and exchange-traded funds.
Money flowing into foreign stock funds is at record levels — $64 billion for 2004, according to the Investment Company Institute. The next-closest record was $50 billion in 2000, a period in which the foreign market tumbled 27 percent within 12 months of the hype.
The Leuthold Group of Minneapolis points to 2000 in a recent report because it is not an anomaly. Since 1994, all five periods of massive speculation in foreign stocks have ended up bruising investors — especially those who discovered hot funds after other investors had pocketed outstanding returns for months.
Consequently, after four years of strong foreign-stock performance, Leuthold is telling investors to be cautious at this point in the cycle. This year, foreign markets are up about 13 percent, giving investors almost twice the return of the Standard & Poor's 500, an index of U.S. stocks.
"While we continue to see great investment opportunities for some foreign markets in the longer term, we are concerned that excess speculation is rapidly building with regard to foreign equities," says Leuthold analyst Eric Bjorgen. "Recent momentum is not likely to last."
To highlight the concern, Leuthold used this title for its research: "Offshoring the Next Bubble."
The flows of cash into foreign funds this November tripled from last November and rose almost 50 percent in the last four months to $6.2 billion. Historically, that level of investing has portended disappointment for investors in foreign stocks.
Bjorgen found that the last five peaks in foreign investing occurred when cash flowing into foreign funds surged more than $5 billion during a four-month period.
Since 1994, each time investors poured that much cash into these funds, markets fell during the next three months — averaging a 4.3 percent decline.
The latest speculation has prompted investors to buy foreign market exchange traded funds like never before. So-called ETFs are like index mutual funds that trade like a stock. They bundle many types of stocks and allow investors to buy a diverse package.
The Investment Company Institute has reported that money flowing into foreign exchange traded funds is up 82 percent for the year. Among popular foreign ETFs are iShares MSCI EAFE (EFA), an investment in a broad index of foreign stocks, and iShares MSCI Emerging Markets (EEM), which invests in developing nations such as Brazil.
Long term, Bjorgen thinks these will be sound investments. But given the speculation, the Leuthold Group is reducing its holdings in emerging markets. The investment manager had 9.3 percent of its portfolio invested in emerging markets, but this month cut back to 8 percent and plans to reduce exposure even more.
Typically, Leuthold holds only 5 percent in emerging markets because of volatility.
As an example, Morgan Stanley Latin American strategist Mario Epelbaum notes in a recent report on maturing emerging markets: "In the last 10 years, neither Mexico nor Brazil has strung together three years of positive performance in a row."
Still, he is not recommending that investors sell Latin American investments: Valuations aren't excessive, Mexico pensions are going to be buying stocks for the first time in January and Brazil continues to participate in a commodity boom.
Meanwhile, Morgan Stanley economist Richard Berner notes: "The pace of overseas economic activity is slowing. The slowing is widespread, as China's production machinery is decelerating, Japan's capital spending cycle paused, and European growth fell by half over the third quarter."
That doesn't mean the economies are near recessions or that investors should deviate from putting a portion of 401(k) money into well-diversified foreign funds.
But speculators trying to catch what they've missed should beware.
"Investors who missed the party in the early years of this decade could opt to wait until these funds correct," says Morningstar analyst William Samuel Rocco.
I think people in the I fund may find this article interesting... and given the information presented in it, I believe I'll continue lightening my exposure to the I-fund over the next two weeks.
Foreign-stock bubble may burst
[size=-1]GAIL MARKSJARVIS[/size]
Investors have a knack for trotting off to stocks in foreign lands during the worst of times. This might be one of those times.
Newscasts are filled with doom-and-gloom stories about the falling dollar and hype over the benefits of investing abroad as an easy remedy. So, investors are pouring money into foreign mutual funds and exchange-traded funds.
Money flowing into foreign stock funds is at record levels — $64 billion for 2004, according to the Investment Company Institute. The next-closest record was $50 billion in 2000, a period in which the foreign market tumbled 27 percent within 12 months of the hype.
The Leuthold Group of Minneapolis points to 2000 in a recent report because it is not an anomaly. Since 1994, all five periods of massive speculation in foreign stocks have ended up bruising investors — especially those who discovered hot funds after other investors had pocketed outstanding returns for months.
Consequently, after four years of strong foreign-stock performance, Leuthold is telling investors to be cautious at this point in the cycle. This year, foreign markets are up about 13 percent, giving investors almost twice the return of the Standard & Poor's 500, an index of U.S. stocks.
"While we continue to see great investment opportunities for some foreign markets in the longer term, we are concerned that excess speculation is rapidly building with regard to foreign equities," says Leuthold analyst Eric Bjorgen. "Recent momentum is not likely to last."
To highlight the concern, Leuthold used this title for its research: "Offshoring the Next Bubble."
The flows of cash into foreign funds this November tripled from last November and rose almost 50 percent in the last four months to $6.2 billion. Historically, that level of investing has portended disappointment for investors in foreign stocks.
Bjorgen found that the last five peaks in foreign investing occurred when cash flowing into foreign funds surged more than $5 billion during a four-month period.
Since 1994, each time investors poured that much cash into these funds, markets fell during the next three months — averaging a 4.3 percent decline.
The latest speculation has prompted investors to buy foreign market exchange traded funds like never before. So-called ETFs are like index mutual funds that trade like a stock. They bundle many types of stocks and allow investors to buy a diverse package.
The Investment Company Institute has reported that money flowing into foreign exchange traded funds is up 82 percent for the year. Among popular foreign ETFs are iShares MSCI EAFE (EFA), an investment in a broad index of foreign stocks, and iShares MSCI Emerging Markets (EEM), which invests in developing nations such as Brazil.
Long term, Bjorgen thinks these will be sound investments. But given the speculation, the Leuthold Group is reducing its holdings in emerging markets. The investment manager had 9.3 percent of its portfolio invested in emerging markets, but this month cut back to 8 percent and plans to reduce exposure even more.
Typically, Leuthold holds only 5 percent in emerging markets because of volatility.
As an example, Morgan Stanley Latin American strategist Mario Epelbaum notes in a recent report on maturing emerging markets: "In the last 10 years, neither Mexico nor Brazil has strung together three years of positive performance in a row."
Still, he is not recommending that investors sell Latin American investments: Valuations aren't excessive, Mexico pensions are going to be buying stocks for the first time in January and Brazil continues to participate in a commodity boom.
Meanwhile, Morgan Stanley economist Richard Berner notes: "The pace of overseas economic activity is slowing. The slowing is widespread, as China's production machinery is decelerating, Japan's capital spending cycle paused, and European growth fell by half over the third quarter."
That doesn't mean the economies are near recessions or that investors should deviate from putting a portion of 401(k) money into well-diversified foreign funds.
But speculators trying to catch what they've missed should beware.
"Investors who missed the party in the early years of this decade could opt to wait until these funds correct," says Morningstar analyst William Samuel Rocco.
imported post
Thanks Mike, valued article. While I did well yesterday 100% I. fund my thinking is to follow the earlier recommendation of Tom and your current recommendation. It appears the$ is near it's bottom now and will start next year a long slow recovery. The S fund has been strong and our economy is getting stronger. I thought I had a better short term catch-up play with the I against the S. Both S and C are 1% ahead of the I still from it's pullback andthe I fundhas just gotten back to it's high. Or I may stay put and hope to pick up that 1% advantange if I closes on S.Interesting decisionsin a great stock period! Fingures crossed all keeps going!
Thanks Mike, valued article. While I did well yesterday 100% I. fund my thinking is to follow the earlier recommendation of Tom and your current recommendation. It appears the$ is near it's bottom now and will start next year a long slow recovery. The S fund has been strong and our economy is getting stronger. I thought I had a better short term catch-up play with the I against the S. Both S and C are 1% ahead of the I still from it's pullback andthe I fundhas just gotten back to it's high. Or I may stay put and hope to pick up that 1% advantange if I closes on S.Interesting decisionsin a great stock period! Fingures crossed all keeps going!
coolhand
Well-known member
imported post
Thanks Mike, this is a good article. Between the collapse of the dollar to historic lows andthe massive amounts ofmoney pouring into foreign investmentsI think we should wary of how much exposure wehave to the "I" fund.
We also need to take into consideration, as the article points out, that China is slowing down its econmomy and thatEuropean and Japaneserates of growth maynot justify a continued run-up in the "I" fund.
Smedlap...what do you think?
Thanks Mike, this is a good article. Between the collapse of the dollar to historic lows andthe massive amounts ofmoney pouring into foreign investmentsI think we should wary of how much exposure wehave to the "I" fund.
We also need to take into consideration, as the article points out, that China is slowing down its econmomy and thatEuropean and Japaneserates of growth maynot justify a continued run-up in the "I" fund.
Smedlap...what do you think?
imported post
Excellent article. Thank you. I'vehadbetween a third and a half of my TSP account in the I over the last few months. I think the dollar is going to slip a little more so I will stay put for just a little longer, but that article tells me it's time to have an exit strategy in place.
Thanks again
Dave
Excellent article. Thank you. I'vehadbetween a third and a half of my TSP account in the I over the last few months. I think the dollar is going to slip a little more so I will stay put for just a little longer, but that article tells me it's time to have an exit strategy in place.
Thanks again
Dave
Show-me
Well-known member
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