Lobo's Investment

This week, the rise in stock market hits the newspaper headlines. That's a signal for a CRASH comming (may be within 3 months). The market may be pushed higher and then ... a panic sale.

In this market situation, it's important to evaluate the down side risk of my portfolio. It may be worth to simulate the behaviour my portfolio in the bad years such as 1997, 2000 or 2002.

An escape route have to be planned and evaluated before ...

China made a deal on free trade in goods with ASEAN in 2004. This was a reason I bought in the ASEAN fund in 2004; thinking that free trade with a large economy would boost the small equity markets of ASEAN. And a deal on services is made this year. Although I think a service deal would benifit less to ASEAN as the pervious goods deal, a strong growth in ASEAN countries is still expected. Banks and IFAs started to propose ASEAN fund this year. The fund sales and the subsequent money inflow would reinforce the growth. The money inflow would be shown in this year's fund annual report.

Japan and ASEAN decleared that they would seek an FTA by the year's end. The economic data published by Japan recently is really disappointing. I have no more reason to hold any Japan fund. Investing in Japan fund was the worst investment decision I had made in the past few years. I need to self reflect on this.



In Europe, the proposed take over ABN AMRO sinaling an increase in financial integration. There was a change in regulation rules - lighter rules from the EU finance instead of the previous local rules. That implies cheaper capital and lower cost of trade amoung the Euro countries. The integration of Europe is a trend towards another financial superpower. That justify an overweight in the position of Europe.

Just received the 2006 Annual Report from BlackRock Merrill Lynch. Following the money flow would be an easy way to invest. From the annual report, I found a few funds is having strong money in-flow for the past three years. Some doubled in size every year, some even increased 5-folds in a year. Seems that the trend that investors are moving their money from the bond market to Europe and Commodities still follows.

Strong positive:
European Growth
latin American
New Energy
World Gold
World Mining

Negative:
Asian Tiger Bond
Euro Short Duration Bond
Euro-Markets
Global Bond
Strategic Alllocation
US Government Mortage
US SmallCap Value