High Flying Market Makes Good Buys Hard to Find

AS THE MARKET FLIES HIGHER, GOOD BUYS ARE BECOMING HARDER AND HARDER TO FIND.

Market activity is almost beginning to resemble the jumpy behavior typical of internet stocks in late '99, when they were at their most frothy. Despite that, we still see values in the market. It's still possible to make money, but stay informed. Rather than jumping in aimlessly, our readers have the insight to watch for opportunities. Most people, however, have only just begun to realize that the market is headed upward. They missed most of last year's astounding gains, and they're looking to "catch the wave," albeit a bit late. They may be disappointed. Many technology stocks, in particular, are already far ahead of their realistic worth. Other "name" companies, like Wal-Mart, have never come down to reasonable levels. If new investors jump in without discernment, they'll be buying into a market that's already somewhat overvalued. If they simply buy tech-heavy index funds or big-name stock portfolios, they will be giving those same leaders another boost in their already hefty P/E ratios. Also, look for further inflation among those "name" stocks. The gamblers among us might want to play them for the rise, but we feel that better, safer opportunities exist readers know to look outside the mainstream for their investment ideas.

Among those lesser-known equities, one must certainly consider foreign stocks. Investing only in America is not enough in any market and is ? at a time when the U.S. dollar is at its weakest ? more dangerous now. Finally, the rest of the investment community has begun to realize that the dollar has been set up for a fall. The weakening dollar has been the story for the past year, alongside the news of a strengthening market. These seemingly contradictory results demonstrate just how strong the market's 2003 rise really was. To power through the strong downward pressure from a weak dollar, the upward push needed to be doubly strong.

The debate rages over the cause of last year's market rally. Is it an overdue recovery from a distorted drop? Or is it an emotional upswing in the midst of a continuing bear market? Resist the urge to jump into one camp or the other! We cannot know for certain which is true until we know more about the underlying economic recovery. If the recovery is real, the market rise is justified and is likely to persist. If the recovery is a phantom, based on Keynesian over-spending, coupled with stimulation-based tax cuts, then the market rise will be short-lived. My guess is that it is a mixed bag. While there is likely some potential for real recovery, the greater impetus has probably been the spending spree in Washington. Eventually, the piper must be paid, and the economy will weaken accordingly. Still, it is possible that the recovery may be fully legitimate. We can't really know for certain until after the fact.

With this ambiguous assessment, how can we make intelligent investment decisions? The answer is surprisingly simple, and yet unexpected. If we see a strong recovery, the spillover will affect all free economies worldwide, and will have the greatest impact where stocks have been beaten down the most and growth potential is highest. That would be the emerging markets. On the other hand, if the recovery is weak, and the dollar continues to plunge, we'd want to be invested overseas: particularly in those countries with the least dependence on the U.S. and those which are most undervalued. Again, this leads us toward certain emerging markets.

A savvy investor will be looking toward opportunities in unexpected places, regardless of one's outlook. This explains our growing emphasis on World Investing. Among other opportunities, we've been browsing discounted Country Funds recently. Some attractively valued funds at the present include the New Ireland Fund (IRL), and the Swiss Helvetia Fund (SWZ) among the more developed world, and Brazil Fund (BZF), Latin American Discovery Fund (LDF), and Korea Fund (KF) among the faster growing economies. We're also looking for individual stocks in some of these economies, many of which have found their way into our stock analysis pages.

The other key to finding success is avoiding moribund bureaucratic nations. A country which limits firms' ability to remain flexible in this changing world dooms them to slow or even negative growth. For this reason, we tend to avoid some heavily regulated European economies such as France and Germany. We also remain skeptical of growth trends in still-communist China and Vietnam.

Since the same structure limits true innovation and prevents the winnowing of the inefficient, we find it difficult to believe that the industries will escape more severe growing pains than those in Japan and Korea in earlier years, even while there is great opportunity. Instead, we prefer the opportunities among nations with a proven dedication to freedom. Ireland and Switzerland fit the bill clearly, as do Australia and New Zealand, Netherlands, Austria, Portugal, and the Scandinavian states. We also see opportunity in sections of Eastern Europe, largely due to opportunities from convergence with the European Community. Estonia is particularly well-run, but provides few investment opportunities. Hungary, Poland, and the Czech Republic are popular investment zones in the region. In the developing world, picking winners is much more difficult. Some smaller nations like Barbados and Malta offer good governance but few investment alternatives. Colombia has a reasonable government, but it has proven incapable of dealing with drug smugglers and revolutionary insurgencies. Brazil has been making surprising strides in a positive direction, despite the election of a socialist leader. India has a dominant position, and improving institutional structures.

Investing in emerging economies is fraught with uncertainty. But opportunities more than compensate for risk. This kind of investing is not for the faint of heart. For the more conservative, we recommend sticking with safer economies like Ireland, Switzerland, and Australia, with smaller holdings in some of the safer developing nations. Still, we feel keeping all one's holdings in U.S. securities may be less than ideal. If the dollar continues to depreciate, the U.S. may not remain the strongest market.

That's not to say that the U.S. market is unattractive. We are still finding great opportunities there, but they are becoming fewer, and as more people pour their moneys in, and the prices rise, their number will continue to decrease. Keep an eye out for variety in your selections.

To send comments or to learn more about Scott Pearson's Investment Advisor Services, visit http://www.valueview.net

Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S.

---

5 Simple Steps for Serious Saving and Financial Growth

1) Pay off your loan, credit and store card debt... Read More

Getting An Offshore Bank Account Via The Internet

There is no need to use the many middleman websites... Read More

Building Wealth: A Wealth Building Strategy Is More Than Simply Diversifying Your Investments

Wealth - an abundance of values. Each of us determines... Read More

10 Ways To Find The Money Hiding In Your Paycheck

No matter how tight things are financially for you; no... Read More

You Deserve To Retire Early

The fact is that most people continue to work for... Read More

Tax Strategy - Theres More to Building Wealth than Clipping Coupons

We talked recently about the wealth formula:Spend less than you... Read More

How To Get Paid Instantly Via Stormpay? Try Online Rewards Programs

E-currency is very popular on the Internet today. People use... Read More

Personal Finance Rules to Building Wealth

Key 1 Pay your self firstkey 2 Saving is not... Read More

Pay Yourself First - If the Only Thing You Did Was This, Youd be Rich

Bottom line. No exaggeration. No hype. If you want to... Read More

Early Retirement The Dream of the Working Classes

Everyone dreams of early retirement. The idea of no longer... Read More

Get Rich Slowly

Is it hard to get rich? If you're young, not... Read More

Cutting Costs Can Significantly Increase Your Income

As a work at home Mother, I know the value... Read More

Increase Your Business with a New Old Method: Vaastu Shastra

Whether an established conglomerate or a fledgling company, a business... Read More

Easy Ways to Save $1,000

Vacation season is upon us and it can be tempting... Read More

How I made $122,000 and lost $132,000 - A lesson in Assets vs Liabilities

This is a true story from my own experience that... Read More

Building Blocks of a Financial Foundation

You can't build a house from the roof down, and... Read More

Super-charge Your Dream of Retiring Rich with the Roth 401K!

This retirement account is so new and unique that you... Read More

Cost Averaging - It Makes Sense (Dollars & Cents)

It's no secret that the market goes UP...the market, goes... Read More

Q and A: Financial Independence Tips For Women From Coni Cecil

As a woman Netpreneur, I sat down via e-mail with... Read More

Is Your Money Keeping Up With Inflation?

In today's unpredictable global economy, you obviously never know what... Read More

5 Easy Ways to Save and Build Wealth

1. Pay off high-cost debt. The best investment most borrowers... Read More

I Dont Need A Financial Coach To Help Me!

You've been thinking that your financial life could probably be... Read More

Residual Income - The Myth

"Join our program and retire in 3 months..." yeah, right.We... Read More

Five Straight Steps to Opening an Offshore Bank Account

Despite what you may have read or heard, anyone is... Read More

How To Get Investors And Bankers To Part With Their Money For Your Business

Time and time again entrepreneurs are losing out on getting... Read More

My Ambitious Niche - A Completely NEW Way To Find Ambitious Wealth

Turn to the year 1999, a couple of friends sitting... Read More

6 Proven Wealth Building Strategies

Building wealth is as simple as saving a little bit... Read More

Top 10 Secrets of Getting Rich!

As many people have observed, "Success leaves clues." If you... Read More

Financial Freedom, Is It Only A Dream or Just Steps Away?

Almost all of us go to work everyday and do... Read More

The Morphing of Thought and Cash

Here are some thoughts about the morphing of thought and... Read More

Finding Financial Freedom

Do you ever get this in your email box: Find... Read More

10 Wisdom-Based Wealth-Building Strategies

"It's the business of your life?and you're the CEO!" Gala... Read More

How to Save Money and Take the Vacation You Always Wanted

Many people don't realize how much money they spend on... Read More