Yet More On Sectors

As a follow up yesterday’s double post here and at Greenfaucet about sector investing and thematic investing based on articles from the Journal of Indexes, there was another article of interest called Sectors In The World of Global Investing. It is written by David Blitzer and Maureen Maitland. While I will not likely out debate Blitzer on anything I do disagree with his central thesis which is that country selection matters less and less as sector selection matters more and more. Anyone who has ever read this site will know I am a huge believer in sector investing but country selection is just as important IMO. Many countries are known for a certain something like Norway and oil, Brazil and natural resources and so on. A decision needs to be made as to whether you want your exposure to a country to be in the area that it is most known for or not. This ultimately boils down to an opinion but for Norway and Brazil I do want what the countries are known for. But for Australia I went with a bank instead of a resource company. For me the process of portfolio building involves selecting countries and then figuring out how they can work into the portfolio best. During the worst of the bear market (assuming the worst is really behind us) much attention was paid to the fact that correlations all went up (everything went down) and so many people said that diversification did not work. My thoughts about this have been the same since long before the last bear market started. We saw in the...

Yet More On Sectors

As a follow up yesterday’s double post here and at Greenfaucet about sector investing and thematic investing based on articles from the Journal of Indexes, there was another article of interest called Sectors In The World of Global Investing. It is written by David Blitzer and Maureen Maitland. While I will not likely out debate Blitzer on anything I do disagree with his central thesis which is that country selection matters less and less as sector selection matters more and more. Anyone who has ever read this site will know I am a huge believer in sector investing but country selection is just as important IMO. Many countries are known for a certain something like Norway and oil, Brazil and natural resources and so on. A decision needs to be made as to whether you want your exposure to a country to be in the area that it is most known for or not. This ultimately boils down to an opinion but for Norway and Brazil I do want what the countries are known for. But for Australia I went with a bank instead of a resource company. For me the process of portfolio building involves selecting countries and then figuring out how they can work into the portfolio best. During the worst of the bear market (assuming the worst is really behind us) much attention was paid to the fact that correlations all went up (everything went down) and so many people said that diversification did not work. My thoughts about this have been the same since long before the last bear market started. We saw in the...