Well everyone is interested in the markets, the price of oil, interest rates, and just where the economy is heading. If I had the answers to any of those issues, I would not be writing a blog and eBooks but rather making my millions on my own. Alas, I and no one I know of has any idea where the economy is headed. My feelings are the economy is getting stronger, and things are getting better for the average person in most places in the States. Europe is another matter as their economy is not near as strong as America’s mainly due to the European Union and some weaker members that are hurting the overall strength of the Union. The BRIC countries have their issues as well. Consider India is doing about the best of the four of the BRIC but it even sees its issues. The last I looked their equities while still considered to be developing are priced high when compared to other developing countries. China is seeing a significant slowdown in its infrastructure growth with some new cities siting uncompleted and empty for the most part. And China’s imports of natural resources from Brazil further show the slowing of China’s growth and causing pain for fellow BRIC member Brazil. Russia is its worst enemy at this point with altercations in Crimea, sanctions by the world’s economic powers are hampering an economy that was not doing all that well even before the territory disputes happened. Yes, the BRIC is no longer where you want to be in my opinion.
That actually leaves developing nations in Southeast Asia and my new favorite area, frontier markets that are countries are striving to become emerging markets. Provided that you do not concentrate on one area of the world for frontier markets and buy a mutual fund or ETF you can see some amazing gains. Here I would normally advise you to stick with an index fund but with frontier markets an actively managed fund may very well be worth the extra management fees. These are particularly difficult markets to research on your own, and many are extremely difficult to make purchases in the home country. A bond fund in the frontier markets can be viewed in the same manner and go with an actively managed fund in this instance as well. Emerging markets are still a good value in today’s market provided you try to avoid a concentration in the BRIC countries. The Middle East and some African countries will qualify for either emerging or frontier markets as they are close to being considered either. If the interest rates start to rise you may see, even bigger opportunities in these two markets as higher rates will hinder their growth to a degree. But they will still grow, and I do not see rising rates killing the potential in these markets over the long term.
The United States is really in a Bull market run that I feel may be in line for a correction, but I do not think that the US markets are overvalued by any means. With an S&P P/E ratio of less than 20 it is far from the highly overpriced P/E ratios of 2007 and 2000 in particular. We still have some room to grow before I would consider the markets overpriced. If you look for hidden gems in the equities here, there are some to be found. Consider Coca-Cola, up less than 4% over the last few years and paying a nice dividend that equates to about 3.3%. And Coke has paid that dividend non-stop since the late 1800’s. Again, that is not bad considering it has paid that despite two World Wars, the Great Depression and the Great Recession. And when you consider Coke is a US company but it has sales in every country in the world except one or two Communist countries like North Korea. Let’s face it the world eats the company’s products up non-stop. But do not stop there are there are many other companies just like Coke or ones that are similarly situated for still more growth. The Bull market may be one of the best we have seen in our lifetimes, but I am not convinced it is time for a Bear market to be called. But as with any situation what I think does not matter really, it is what you think and feel. Always do your homework on any position you may take and always keep up with any changes that may occur. I do believe that the US markets are the best opportunity to create long-term wealth.
As for oil and commodities, I am baffled here. Oil is stagnated at around $60 a barrel yet gas is going up. The US is producing more oil than any other country now, and OPEC is even increasing its output. This is creating an overabundance of oil that can be stockpiled for future use. My feeling here is to keep importing foreign oil and cut back the production of domestic oil. Here I believe that we should use someone else’s oil and save ours for use later when foreign oil may not be as plentiful. As for natural gas, we should use that domestically as well and not export it to other countries. Let’s keep our fossil fuels here and use everyone else’s first.
My point in this post is no one knows where the next it the market is going to be. No one knows what the markets will do in the short or long term. And no one knows what will happen to oil or even interest rates which I did not touch on here.
If you have any questions or have, any comments feel free to contact me.
