With the Olympic Games being upon us, I was reminded of a reader’s comment last year. China’s ETF (FXI) had come off its high by 10% causing us to liquidate our positions. This reader wrote in to say that he would hang on to FXI until after the Olympics and then get out.
I have heard this argument before that investors tie their financial decision to some future event that most of the time has nothing to do with actual market behavior. Let’s take a look at 2-year chart of FXI:
The decision to hang on proved to be a costly one, since FXI has come off its high by over 40% and has shown tremendous volatility this year. Despite wishful thinking, and the fact that Olympic events at times can light the fire for an economic rebound, this is usually only a short-lived phenomenon and should not be used as an investment opportunity.
Trends don’t lie, they simply state facts as they are right now, and the fact is that FXI is in bear territory. Until it solidly breaks back above its long-term trend line, I would not even consider it.
Comments 4
Thanks for this wonderful post.
Ulli: Can you please tell us your thoughts on Vanguard Health care ETF with the symbil VHT.
The price has just moved above the 200 day MA? (I could not paste the graph in this comments area).
Should we buy this? Also, does the slope of the 200 day MA line make a difference? Positive slope, versul flat versus negative slope? Thanks for your time.
In one of your past posts,you had mentioned how to pick a particular mutual fund from your weekly news letter. I could not locate that write up. There you had also mentioned that you would be glad to supply a list of mutual funds and ETFs hand picked by you – for a fee. Can you plesase point me to that write up? Or could you please repeat them once again? Many thanks.
To anonymous 1:
I will address VHT in a new post on Monday so that all readers can share.
To anonymous 2:
You pick the funds based on momentum along with the fact whether they have crossed their individual trend lines to the upside or not (%M/A). In the case of domestic and international funds, you need to wait until the TTIs generate a Buy first. Then you would consult the momentum tables. That fee for service you are referring to was discontinued last year.
Ulli…