Saturday, November 13, 2010

Goodbye Wall Street- International investment options for the future

The old days of The Masters of the Universe on Wall Street are going, rapidly. The extremely neurotic behavior of the US investment market has done a lot to finally defuse the mythos of Wall Street infallibility. Managed funds, hedge funds, Exchange Traded Funds and other financial major leaguers are no longer confined to the single market context. Even American funds are hedging in effect, spreading the risk rather than concentrating on the nervous spasms of Wall Street.

The fact is that you can’t invest with any level of certainty in a market which has shown itself to be lacking both judgment and accountability on such a selective basis. Wall Street’s credibility has been crippled since the 2008 crash, and big investment funds are voting with their dollars for more reliable sources of income and capital gain.

Foreign markets

Another issue has also emerged- the “China factor”. Even those who know the Chinese markets and their external investment behavior are sometimes stunned by the speed big capital moves in this region. Chinese equity market investment isn’t quite hair trigger, but it’s something very like it. The Chinese market tactics are based on rapid positioning in the face of market conditions. They’ll pull out of markets like Australia and Japan to take advantage of moves elsewhere, and flood back into those markets when they’ve made a profit.

The Shanghai index also doesn’t follow Wall Street like a lost dog, as many other markets do. That’s starting to appeal to more global investors as The Street and its battered indices rattle around the 10,000 average. The occasional surge of a percent or so doesn’t make up for times in limbo and the irritating process of picking good short term trades.

The European markets are also pretty groggy, except for Germany. The DAX may not be the most glamorous market around, but it’s reasonably well tuned to the current investment environment and the German investment products, backed by Europe’s powerhouse economy, are looking a lot more attractive.


Performance factors in terms of investments are hardly recommendations for Wall Street. One of the most glaring cases of the demise of Wall Street as the only show in town is gold. Many consider gold overpriced, or priced more in relation to a weakening greenback than anything else, but the interest in gold is so strong that it’s hard to believe that investors are picking gold for sentimental reasons. With the whole of the US investment market to choose from, gold has spiked where even oil has been comparatively sluggish.

Other commodities, like wheat, spiked 90% in a month after the Russian drought. Metals and materials commonly outperform equity markets on a daily and sometimes hourly basis.

The New Economy and the markets

The New Economy is systematically obliterating old markets, and indications are that the traditional investment markets are next for demolition. The hedge funds carved up this market effortlessly in the 90s, and New Economy banks and wealth managers are doing the same, just more thoroughly. They’re targeting investors with better deals, better values and much better costs, even on staples like share trading.

Shop around, you won’t be bored.

[The above is a guest post]

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