Sunday Morning Coffee

A reader, maybe a heckler actually, left the following comment. Betting on any country that is not America and not in debt and has natural resources is an easy call. This was a reply to some things I was writing about foreign country selection and the simple act of investing in countries with different economic attributes. I can’t be certain he is heckling me but either way I agree with him, it was an was an easy call. I guess since I made that call (plenty of other people did too) I can say it was easy. The reader’s comment brings up two points. First it is potentially a case of hindsight bias. Like “of course the Asian Contagion in 1997 was not the end of the world and stock market came right back after the decline.” Sticking with that example most people were really quite afraid of the Asian Contagion. The previous two sentences could also be said about the LTCM blowup in 1998. I have no idea about the reader who left the comment but all of these events are big and scary to many people (otherwise there would be no decline). To the extent this is about hindsight bias the notion of realizing an event for what it is in terms of not mattering much in the big scheme and buying at a moment of general panic is going to be very difficult to do. Far less difficult is to realize an event for what it is in terms of not mattering much in the big scheme and just not panicking yourself is much easier to...

Sunday Morning Coffee

A reader, maybe a heckler actually, left the following comment. Betting on any country that is not America and not in debt and has natural resources is an easy call. This was a reply to some things I was writing about foreign country selection and the simple act of investing in countries with different economic attributes. I can’t be certain he is heckling me but either way I agree with him, it was an was an easy call. I guess since I made that call (plenty of other people did too) I can say it was easy. The reader’s comment brings up two points. First it is potentially a case of hindsight bias. Like “of course the Asian Contagion in 1997 was not the end of the world and stock market came right back after the decline.” Sticking with that example most people were really quite afraid of the Asian Contagion. The previous two sentences could also be said about the LTCM blowup in 1998. I have no idea about the reader who left the comment but all of these events are big and scary to many people (otherwise there would be no decline). To the extent this is about hindsight bias the notion of realizing an event for what it is in terms of not mattering much in the big scheme and buying at a moment of general panic is going to be very difficult to do. Far less difficult is to realize an event for what it is in terms of not mattering much in the big scheme and just not panicking yourself is much easier to...

Virtue In Being Early?

Trader Mark has a post up about Chile (hat tip to a reader) that was inspired by this Wall Street Journal article. Both the blog post and the WSJ article have a lot of meat on the bone. Mark says that he’d never written about Chile before and based on what he wrote I presume he is favorably disposed (apologies if I read that wrong). I’ve been writing about Chile for about four years, following it a little longer than that and have had exposure more often than not over the years. It has been quite clear to me for several of the reasons cited in both links that Chile offers a lot of potential utility as an investment destination. This post is not about whether you should think Chile makes for a good investment or not. To be clear neither Mark nor the Journal are late. I think, though, this is a good example of how investors will learn about new (to them) destinations and the potential value in having exposure to these places before that happens. Although that is a fairly obvious point I know (you do too depending on how much stock market television you watch) that many investment professionals are reticent to be early in adopting something new–safety in numbers. I know from some of the conferences I go to, and by some feedback from my Street.com articles that not many folks invest at the sector level, for example, and individual countries are also uncomfortable. I believe that the way markets and investing are evolving people will have to go narrower than they do now....