MARKET COMMENT

May 9, 2007





I thought we might have another “Big Wednesday” but it was just business as usual. The Fed did its thing and even those highly trained at parsing the text were disappointed. But, hey, the markets were up so who’s to complain?

Let’s get to it.

The “buzz”, beyond buy-outs and liquidity, is about global investing. Today Chicago-based Spectrem Group report results of a survey showing 40% of investors with portfolios greater than $500K would be investing overseas. Warren Buffett reported to his flock that with his meager stash of $40 billion at Berkshire Hathaway would be looking more overseas for investments. The venerable newsletter writer Richard Russell, long a stock market bear, has thrown in his bearish towel reportedly saying: “There’s a global economic boom occurring.” [Does this mean he’ll start following his Dow Theory system now?]

A close friend was advising today that it’s always best when fundamentals can be well matched with technical disciplines. Sure, wouldn’t that be lovely? I had to tell him of recommending China investments in the late 1980s and early 1990s. Good idea, right? Wrong! The timing wasn’t right since investors became distracted by the rising US stock market. Ten years too early, but be that as it may, global investing is what’s happening now.

Since the bear market bottom in late 2002 or early 2003 [take your pick] many overseas markets have outperformed their US counterparts with some doubling the rate of return. So does that mean new investors are late to the game? Not necessarily but proceed with caution since timing is everything!

Meanwhile back on Wall Street it was more of the same.







































































We were talking about overseas markets weren’t we?















































The investment “rock around the globe” has never been more en vogue. One week Latin America is hot, then Europe, Asia/Pacific, the US and so forth.

It was disappointing to hear Warren Buffett criticize ETFs in such a thoughtless and paternalistic manner over the weekend. For him not to understand even the slightest benefits of ETFs versus mutual funds was shocking. He demonstrated a complete lack of knowledge of modern commission structures available to individual investors. Equally galling was his views that it’s not good individual investors are able to sell their funds anytime they like. C’mon Your Wizardry, stick to what you know!

Have a pleasant evening.


Disclaimer: Among other issues, the ETF Digest maintains long or short positions in: SPY, MDY, IWM, QQQQ, FDN, IGM, PSI, PSJ, IGN, IBB, IVE, DVY RYF, RCD, GLD, DBC, EFA, EEM, ILF, EPP, EWW, EWZ, EWC, FXI, EWH, INP and EWA