A look at markets that are down
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A look at markets that are down
Posted by GenesChin on 6/25 at 9:10 pm
I have been reading a lot about the problems about Brazil and China but can someone go more in depth about them? I am looking to invest some extra cash in my Roth (about 700 every 2 weeks and have some free trades that will expire) and wondering why these plays aren't a good idea


Brazil
- I have read about the political instability, rising inflation, increase in government taxes and lower commodity prices affecting their economy. Can someone explain though why the current valuations of ETFs such as EWZ that are setting new 52 week lows almost daily are bad trades considering they haven't been this low since the financial collapse. Also, with the World Cup and then the Olympics coming up, how will that affect their market? Will the building of infrastructure make them a good long term trade? Will investing in companies like Ambev be smart to take advantage of all the increase demand during the next few years?


China
- I have been looking at Sinopec lately and how it is at lows that haven't been seen since 2010. It pays a monster dividend. What separates Sinopec with the big oil companies of the west? They seem to be expanded their oil ventures and long term, how low can oil get? Also, China Mobile, they are trading near a 52 week low, have a P/E at 9.7 and pay a 4+% dividend





This post was edited on 6/25 at 9:12 pm

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Posted by ThaBigFella on 6/25 at 9:32 pm to GenesChin
Fwiw I bought more sinopec and china mobile this week as well, I like your thinking. Everyone talks about the us shale boom, china has like 8x as much shale and they're partnering with American companies to learn how to extract it. Sinopec only issue is its dividend is twice a year and it already paid the big one, next one is smaller and they regulate prices strictly so it's not really a free market, it's government regulated prices.


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Posted by GenesChin on 6/25 at 9:36 pm to ThaBigFella
I would plan on SNP being a long term purchase as I like their expansions into Africa (since China clearly doesn't care about morality or rebels killing workers) as well as the shale that you talk about. I was just wondering if there was a problem with the company I couldn't find.

Since the prices are regulated though, does it really affect their stock that heavily?



I have been really big on finding tanking markets that have long term future such as Banks post financial crisis, BP&Toyota after huge mishaps and so on. Seems to be a lot of money to be made on people's short term fear. I am in my 20s and risking my investment portfolio means losing nickels and dimes compare to career earnings


This post was edited on 6/25 at 9:39 pm

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Posted by LSU0358 on 6/26 at 9:05 am to GenesChin
Brazil is in deep crap. Looking at the BVSP is a picture of what inflation looks like. A rising US Dollar will keep them down for the next 3-5 years IMO.

As far as China goes, take a look at Japan in the late 80's. Chinese demographics and the 1 child policy are going to come home to roost with a vengance, especially in more developed areas.

BRIC bulls have been hurting almost as bad as gold bugs here lately.



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Posted by TigerDog83 on 6/26 at 9:11 am to LSU0358
quote:

BRIC bulls have been hurting almost as bad as gold bugs here lately.


You have to think long term on the BRICS ideas. I'm thinking at some point there has to be value in places like Australian natural resource companies because of their proximity to Asian markets. Even if growth in China slows down there is still a huge need for Australian coal, ore, bauxite, natural gas, etc. that will be headed for Asia for many years. The question in my mind there is at what level do these players become a value?



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Posted by LSU0358 on 6/26 at 9:28 am to TigerDog83
quote:

The question in my mind there is at what level do these players become a value?


Very tough question to answer. On Brazil and Russia I think they will be in for a tough time with commodities being priced in dollars. The rising dollar makes there markets unattractive.

China has big corruption and demographics issues that could be a problem.

India is the most attractive of the 4 but they also have some corruption issues that will hold them back. If I had to pick a BRIC to invest in, I'd go with India.

Australia is another matter IMO. They don't have the demographics problems of China, and there corruption is no greater than the US or Europe. Being less exposed to oil and more to coal and natural gas will also be a big help for them. Australia could be very attractive in the future.



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Posted by GenesChin on 6/26 at 9:40 am to LSU0358
The appreiation of the dollar is not gping to be a long term position. I wouldnt bet on that trend 4-5 years down tbe road. Also, with the influx of tourisn in the next few years, there should be a boom. No country has been down 6 months before the olympics. Finally, long term benefits of infrastructure development shoild be huge. Brazil has mega infrastructure problems that would make massivr growrh unsustainable long term witjout the investment.

China may have corruption problems but I cant imagine in the next 10 years that a major exporter of oil can be that effected.



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Posted by LSU0358 on 6/26 at 11:12 am to GenesChin
quote:

The appreiation of the dollar is not gping to be a long term position.


Over the next 20+ years I agree. 4-7 years however, I disagree. The dollar has been moving down since 1985. IMO it is time for a move to the upside.

I'll feel very confident in that statement if the dollar goes above 92, I'll turn back to dollar bearish with a move below 75.


This post was edited on 6/26 at 11:15 am

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Posted by GenesChin on 6/28 at 4:47 pm to LSU0358
Anyone know anything about Vodacom in Africa? They pay a monster 7% dividend and have been growing every year in terms of sales, wireless penetration and so on. Backed by Vodafone in England and it seems like every venture they take in the wireless telecom world works out in the long run with their expertise and strategy


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