Roseman's Eruptions

Timing the Market: A Mug’s Game

When’s the best time to buy foreign currencies? When’s the best time to buy or add foreign stocks and bonds? And what about commodities: Is this a good time to load-up on things like oil and corn after a plunge recently?

I’m often asked about these and other market timing related investment questions. And my answer is always the same: Target a long-term asset allocation plan for your investments and stick to that plan.

In Memory of Sir John Templeton

As a value investor, I mourn the passing of Sir John Templeton yesterday. The pioneering global value investor passed way in the Bahamas at the age of 95. Sir John sold Templeton Investments to Franklin Investments in 1992.

More than any other individual during his lifetime, Sir John catapulted global value investing in the mid-1950s by uncovering cheap stocks across the world. His passing deserves a tribute because he influenced so many investors.

One of the first markets Sir John invested heavily in the late 1950s was Japan.

Bear Market Rally Highly Likely; Sell into Strength

After a punishing decline in June, U.S. and international stocks are due for a serious bear market rally. And the number of traders betting against further declines, known as the level of short interest, now sits at a record 3.6% of listed equities in the United States. That means a vicious, powerful counter-trend rally is highly possible in July or August.

Wages and the Dollar Fall Behind Inflation in 2000s

Unlike the 1970s when wages soared amid skyrocketing inflation, the 2000s have witnessed benign wage growth.

Americans continue to lag behind official consumer price data as soaring oil and food costs put the average wage earner further behind the inflation curve. In a nutshell, wages are being devoured by rising costs since 2007. Officially, the government states trailing 12-month inflation is 4.2% through May; I say it’s closer to 8% or more.

Gold Barriers: Vietnams Borrows from FDR in 1933

Borrowing a page in the history books from the United States in 1933, the Vietnamese Communist authorities suspended all gold imports in June. This marks the first time a Southeast Asian country has barred gold imports amid skyrocketing inflation, soaring interest rates and an overvalued currency – the Vietnamese dong.

Inverse Stagflation Hits Europe

The term “inverse stagflation” is not widely quoted among the popular financial press. That’s because most investors and analysts still believe the industrialized economies are in a period of 1970s-type stagflation. That’s not necessarily the case, a point I’ve argued in this column over the last several months.

Latin America Only Region to Post Gains in 2008

It’s scary out there!

This is quickly developing into the worst year for global stock markets since 2002 when the MSCI World Index plunged more than 20%. For the first six months of 2008, the global benchmark pummeled 11.8% to post its worst quarter since Q2 2002.

On a sector basis, only energy and basic materials posted gains over the last six months while everything else fell hard – all recording double-digit losses.

History Suggests More Pain Lies Ahead for Investors

Is it time to start buying stocks again?

According to Ned Davis Research, the average bear market since 1960 has lasted about 14 months resulting in an average 31% decline for U.S. stocks before a bottom finally formed. The mildest bear market saw the Dow decline 21% in 1990 and the worst bear market resulted in a 45% plunge from 1973 to 1974.

Are we in a Secular Bear Market?

With global stock markets now down about 20% from their highs last October, it’s time to debate whether we’re in a secular or cyclical bear market.

Is this the 1970s all over again? Are we heading into a protracted period of economic misery driven by rising inflation and skyrocketing commodities prices? If so, aren’t stock prices still vulnerable to further declines?

This is not stagflation – at least not exactly.

Big Bad Bear is Still Here in 2008

The stock market futures for this morning’s opening in New York look pretty dismal. In Europe, markets are down over 1% with more bad news hitting the financial services sector as Fortis scraps a $2 billion dollar dividend payment to shareholders.

Thus far, June is the worst month for global investors since January, with the S&P 500 Index plunging 6.6% and the MSCI World Index down 7%.