Tuesday, June 19, 2007

Asia: hot market or frenzy?

More debate on whether or not we're seeing a bubble in the Asian share markets.

Today we'll hear commentary from Jon Sundt of Altegris Investments; his recent take, "Asia: hot market or frenzy?", is lifted from John Mauldin's "Outside The Box" e-letter.

This brief essay reveals that Asian market performance is a tale of two cities. Charts showing the relentless upward movement of leading market averages over the past several years are contrasted with a chart tracking investment returns in the MSCI AC Asia Pacific Price Index.

This second chart shows that Asian markets were extremely volatile over a twenty year period. In fact, during this period, there were several times when your investment dollars would have been cut in half.

This leads Sundt to conclude that the Asian share markets are extremely complex, and that intrepid investors would probably be better served by talented active managers able to navigate these waters.

While he goes on to say that index investing may clearly be right for some, it's clear his interests lie with addressing the wealthier, "sophisticated" investors who might gravitate towards the alternative investment offerings of firms like Altegris.

In any case, check out the article for an interesting, yet brief, discussion of what to expect when investing in the Asian stock markets.