There’s Usually a Bull Market Somewhere

by Nicholas Vardy

"I have no boundaries. I am totally flexible. I am open to everything and I pursue everything. I have no more compunction about speculating in Singapore dollars or shorting Malaysian palm oil than I do about buying General Motors."

- Jim Rogers

Global investing pioneer Jim Rogers is the ultimate big picture investor.

Ever since his days as George Soros' first investment partner in the late 1960s, Rogers has spent his life tracking financial markets across the globe.

I don't always agree with Rogers' strong opinions.

Nevertheless, I have always admired - and emulated - Rogers' openness to investing in anything and everything he could get his hands on.

After all, why limit yourself to buying and holding only U.S. stocks?

Like Rogers, I believe it's a big investment world out there.

And like him, I am totally flexible.

I don't think it makes any difference whether I make money by trading a currency or by shorting an obscure commodity like palm oil.

I'm willing to go wherever the next opportunity takes me...

ETFs Make Flexible Investing Easy

This flexible investment philosophy explains why I find exchange-traded funds (ETFs) so compelling.

Using ETFs, you can invest in everything from stocks to bonds to commodities to currencies across the world.

You can invest long or short and even place leveraged bets on whether you expect the market to go up or down.

When Rogers shorted the Japanese stock market bubble in the late 1980s, he likely had to set up a local Japanese brokerage account.

Today, Rogers could short the Japanese stock market by buying an ETF at the click of a mouse.

Three ETFs for Today's Challenging Markets

Until recently, the simple strategy of buying and holding U.S. stocks worked like a charm. The average investor looked like a stock market genius. All you had to do was buy a stock and watch it go up.

That all changed at the end of January when volatility in the U.S. stock market exploded.

Strategies that worked yesterday stopped working today.

And investors had to adopt a more flexible approach to making money in the markets.

I monitor hundreds of ETFs that offer just that kind of flexibility.

Here are three that are thriving in the recent challenging markets.

1. iShares MSCI Malaysia ETF

The iShares MSCI Malaysia ETF (NYSE: EWM) tracks a market cap-weighted index of Malaysian stocks traded on the Kuala Lumpur Stock Exchange.

Once a sleepy Southeast Asian backwater, Malaysia began transforming its economy by imitating the four Asian Tiger economies - Hong Kong, Singapore, South Korea and Taiwan.

With a population of 31 million - a little larger than that of Texas - Malaysia is the third-wealthiest country in Southeast Asia with a per capita gross domestic product (GDP) of $13,123.

Last year, Malaysian GDP was 5.9%, among one of the highest in the world. The Global Competitive Index 2017 - 2018 ranked Malaysia an impressive 23 out of 137 countries.

Year to date, the MSCI Malaysia ETF has risen nearly 8%. It also yields an impressive 5.2%, pays out dividends twice per year and has an annual expense ratio of 0.49%.

2. SPDR Bloomberg Barclays International Treasury Bond ETF

The SPDR Bloomberg Barclays International Treasury Bond ETF (NYSE: BWX) tracks a market value-weighted index of investment grade, fixed-rate government bonds issued by foreign countries.

Think of this ETF as a way to invest in "risk-free" Treasury bonds similar to those issued by the United States government.

Developed markets dominate this ETF's portfolio. Almost one-fourth of its assets is invested in Japan. The remainder is allocated to government bonds from Europe, Australia, Asia and Canada.

The International Treasury Bond ETF's current yield is 2.4%. It pays dividends monthly and has an annual expense ratio of 0.50%.

So far this year, the International Treasury Bond ETF has risen 2.2%. With dividends, it has generated a total return of 3.8% year to date.

3. CurrencyShares British Pound Sterling ETF

The CurrencyShares British Pound Sterling ETF (NYSE: FXB) tracks the value of the British pound versus the U.S. dollar.

The fate of the pound is closely linked to Brexit - the United Kingdom's impending exit from the European Union on March 29, 2019.

Following last June's Brexit vote, the pound plummeted.

But from a low of $1.23 against the U.S dollar, the pound has rebounded to around $1.41 - a rise of about 14%.

That's within striking distance of its $1.48 pre-Brexit level.

In fact, had you invested in the pound after Brexit, you'd have outperformed the S&P 500.

2018 will be a volatile year for the pound.

That's because investors hate uncertainty. But once the U.K. resolves the terms of its Brexit transition deal with the EU, the British currency should continue its bull run.

The British Pound Sterling ETF has an expense ratio of 0.40% and has risen 4.9% so far this year.

More in the Coming Months

Each of these novel ETFs ranks highly on my proprietary system for tracking ETFs with the best current outlook.

Each also opens up a whole new universe of investing possibilities that go far beyond traditional buy-and-hold strategies.

I'll be sharing many more of my unique ETF investment ideas in the months to come.

Good investing,


Our Favorite Exotic Bank

Latin America has several developing countries similar to Malaysia. Not long ago, Argentina was considered a market to avoid thanks to its poorly run government and persistent economic woes. But today, its banking sector offers one of the best long-term growth opportunities in the Southern Hemisphere.

That's why Chief Investment Strategist Alexander Green provided an update in December on his Oxford Trading Portfolio recommendation Grupo Supervielle (NYSE: SUPV), owner of Argentina's fifth-largest bank. Here's why he's optimistic about its prospects for the rest of the year

One of the recommendations I feel most optimistic about for 2018 is Argentina's Grupo Supervielle (NYSE: SUPV).

Based in Buenos Aires - and with origins going back to 1887 - Supervielle is one of the country's fastest-growing financial services companies, offering consumer and corporate banking, insurance, and asset management to more than 2 million customers.

The firm owns the country's fifth-largest bank and has 264 branches and 78 senior citizen service centers.

Grupo Supervielle has been on an acquisition spree over the last several years, which is having a dramatic effect on the bottom line.

In the most recent quarter, net income rose 60% on a 43% increase in revenue. Total loans increased 56%. And the nonperforming loan ratio remained unchanged at 2.8% from the previous quarter.

Management raised its earnings guidance for 2018.

Supervielle completed its IPO just under 23 months ago. But the bank followed this up with another equity offering in September 2017.

It would be an understatement to say it was well received. The offering was three times oversubscribed.

The additional $342 million in equity strengthens the bank's balance sheet while giving it the flexibility to meet rising loan demand.

The bank is good at attracting low-cost deposits while expanding higher-margin loans. And it keeps a vigilant watch on risk by focusing on credit quality and delinquency rates.

From a macroeconomic standpoint, Argentina's economy is picking up - with inflation trending down.

The bank is also busy opening new branches, reducing service costs and stepping up digital innovation to enhance the customer experience.

Since adding it to the portfolio in October, it's already up 17.2%.

In sum, Grupo Supervielle is a private capital financial group with excellent fundamentals, a reasonable valuation and superb prospects.

- Donna DiVenuto-Ball with Alexander Green

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