Yellowstone Partners Blog

We recently attended a conference where we heard from Victor Canto of La Jolla Economics. The title of his speech was “Around the World in 90 Days.” His discussion centered on investment opportunities in emerging economies.

In its most simple sense, what he offered was that in the next few years, there will be a great settling of the realization of value in the emerging world, and that countries which have thrived historically by producing goods to export to more mature economies, will thrive in the present as they convert to domestic production.

The following article by Fareed Zakaria echoes those sentiments.

http://www.realclearmarkets.com/articles/2009/06/boom_times_are_back_outside_th.html

At this point it also seems prudent to offer a brief discussion on the merits of overseas investment. As a general rule, American investors are inherently somewhat biased towards domestic investment. There is an unspoken idea that investing overseas is either unsafe or unpatriotic.

The truth is that overseas investment is neither unsafe nor unpatriotic. Any more, companies are increasingly more international in their scope by necessity. The following list details the domestic vs. international revenue for the 5 largest companies in the Dow Jones Industrial Index.

Domestic companies are just as international as international companies. Even as these companies are willing to go overseas in search of profits, so also should investors be willing to go overseas in search of return. Given the state of the mature global economies and the relative stability in many emerging market economies, it seems that we need to check our premises and consider the opportunities that are being presented around the world.

Today the S&P 500 logged a very important milestone in closing above its 200 day moving average.  The moving average is taken by calculating the average value of the trailing 200 days and is a significant technical indicator of momentum. 

Before the market opened this morning, the futures were showing that we would at least challenge the mark, but within minutes of opening, the S&P 500 Index crossed decisively through the 927 mark and stayed strong throughout the day to close at 943.

Just as the Index’s inability to cross through this mark in May of 2008 proved a bearish mark, we believe that at least in the short term, this proves a bullish mark.

While this is just one of many considerations, other positive indicators include a strong reading of consumer confidence, increasing impact of government stimulus action, and a strengthening credit environment.