Continuing with a contrarian theme, I opened four positions today. My main premise is that foreign markets represent a better value than the US stock market. Foreign markets, especially China, Mexico and Emerging Markets are out of favor due to concern that Trump’s trade policies might spark a tariff war. This is a viable concern. A trade war would hurt the entire global economy, including the US…thus I remain with a large portion of my portfolio in cash reserves.
On the other hand, a thriving US economy will be beneficial for most foreign markets. In spite of Trump’s trade rhetoric, a strong US dollar favors nations that export to the US. If global trade can get out of its multi-year slump, the positions I’m buying should do well over the long term.
Today I purchased:
- EIRL Ireland ETF- Ireland has a diversified economy that is on the periphery of the BREXIT/EU divide, with about 25% of its exports going to North America. EIRL is consolidating around its 100dma.
- VWO Emerging Market ETF- As stated above, if global trade improves Emerging Markets will benefit. VWO is consolidating around its 50 & 200dma.
- EWM Malaysia ETF- Of all the Pacific economies, I think Malaysia is positioned to do well. They have a strong commodity export business and a growing services sector.
- WMT Walmart- I added to a long position in Walmart. Although not a foreign ETF, it is still out of favor with Wall Street. The strong US dollar should help Walmart’s profits. If Trump wants to help US workers, then he should enact policies favorable to Walmart which is the largest private employer. On the outside chance that Trump goes after Amazon (he’s called them a monopoly), that would favor Walmart. Bottom line, I don’t think Walmart is going out of business and they pay a near 3% dividend. I think it’s a good long term hold.
On Friday I mentioned an unnamed partial purchase that I couldn’t get 100% filled- that was an Israeli ETF. Unfortunately, today I could not purchase the remainder at my desired price. I’ll keep watching this position and perhaps add to it should conditions change.
Happy New Year !!!
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