A couple of days ago, I posted about investments in Eastern Europe and especially focused on EUROX, which had performed extremely well in the past.

In reviewing the chart again, I need to point out that there is another important lesson to be learned when looking at the comparison with FEZ and EFA. Here’s the graph again:

As you can see, during the market meltdown of May/June 2006, EUROX pulled back sharply, recovered, dropped again and is now just about on even par in regards to performance (for this 2-year period) with FEZ and EFA.

If you had applied a trailing sell stop, as I recommend, you would have been stopped out at a great profit somewhere in the area of the arrow (May 06), which was the time when we liquidated most of our positions. It is important to take profits from a fund that has had a great upside but is also subject to heart stopping drops.

As the market recovered further, EUROX has remained fairly flat since September 06 and has bounced around the unchanged line without offering further upside momentum.

I used to feel guilty. There I had bought this new business/investment book I was looking forward to reading when, somewhere half way through, my fascination waned. I then either forced myself to finish it (with regret and lack of interest) or I shelved it and never picked it up again.

I believe it was one of my favorite authors, Robert Ringer, who said that, if a book can’t hold your fascination, it’s not your fault, but the author’s. Whoa! That opened my eyes, and I realized that in today’s world of instant do-it-yourself publishing, many books come on the market that may have material for a chapter but not enough to fill some 200 pages.

Looking at any book from this kind of viewpoint, I have read a number of them where the author totally strayed from his theme and went off on some tangent that really had nothing to do with my reasons for buying the book in the first place.

For a couple of years now, I have read a new book every week (which is my goal). Most of them are business and marketing related and some deal with investments. For all of them, I now apply a strict rule. I bought the book, because I am interested in the subject based on the reviews I’ve read. If the author can’t hold my interest and “loses” me along the way, I have no problem putting the book down and going on to the next one. No more guilt feelings!

There is so much to be gained by reading good content that is of interest and value. It has greatly broadened my horizon but I refuse to waste my time and be stuck with books that either don’t fulfill their promise or could have been written in a couple of chapters.

I’m trying to improve my reading skills to work my way faster through more material. If you have had any experience with speed reading courses, good or bad, please share them with me.

I’ve come across several articles with somewhat different views about the Eastern European emerging markets and how to invest in them. Some of the countries I am talking about are Russia, Poland, Czech Republic, Hungary, Turkey and others.

Random Roger, in a recent post, had a cautious warning about a possible crisis in Hungary, Kazakhstan, Russia, Ukraine and Estonia because of how they borrowed money while Morningstar’s piece is more focused on the best way to invest in Europe.

There is no denying that one of the top funds over the past few years in this emerging arena has been EUROX.

However, it hasn’t always been a smooth ride and the sharp up and down moves can certainly cause you some sleepless nights. To demonstrate, I have plotted EUROX vs. FEZ (DJ Euro Stoxx 50) and EFA (MSCI EAFE) Index in the chart below:

My latest No Load Fund/ETF Tracker has been posted at:

http://www.successful-investment.com/newsletter-archive.php

A new lifetime high for the S&P; 500 and good economic news pushed all major indexes to higher levels.

Our Trend Tracking Index (TTI) for domestic funds/ETFs now sits +5.80% above its long-term trend line (red) as the chart below shows:



The international index has now moved to +10.42% above its own trend line, as you can see below:

In my recent post about the potential Chinese bubble, reader Ron responded that stock markets can’t be controlled by governments.

While that may be true, government decisions or policy changes, however, can be just as effective in controlling market direction. Such was the case yesterday when the Chinese government announced a tripling of the tax on stock trading to curb excessive speculation. The response was swift as the Shanghai Index lost 6.5% for the day.

Most world markets joined in the early sell off, but recovered later on and, in the case of the S&P; 500, a new lifetime high was made. The chart below shows yesterday’s price activity of the Shanghai Index vs. the S&P; 500:

I referenced articles from fool.com before, but their latest one did not sit well with my kind of thinking. It’s titled “Great Investments for Busy People” and quotes Vanguard founder John Bogle as saying that mutual funds were the finest vehicles for long-term investing ever designed. I can agree with that and realize that his statement was probably made prior to the ETF revolution.

The article goes on to list a few items of importance for you, the busy professional, to look at when evaluating mutual funds. Here’s what it says.

Among other things, when you’re in the market for a mutual fund, you should ask:

1. How long has the fund’s manager been at the helm? At least five years (and preferably longer) is the answer you’re looking for here.

2. How has the fund fared on that manager’s watch? Past performance doesn’t tell you a thing about a fund’s prospects if it doesn’t reflect the work of its current stock-picker-in-chief.

3. Does the manager invest in his or her own fund? If not, why should you?

4. How has the manager fared in up markets and down? When you have a talented manager at the helm, market slumps can represent prime buying opportunities — and juicy gains for shareholders over the long haul.

While I am not totally in agreement with any of the points made, the last one in particular shows the usual ignorance. Okay, some fund managers do better in up markets than others. However, when a prolonged down market hits, it doesn’t matter whether the manager is “talented” or a “beginner.”

Why?

If a fund’s objective is to be long in the market, all portfolio holdings will head south in a bear scenario. Talent and experience won’t help. Unless, of course, the “talented” manager is able to outperform the S&P; 500!

Huh?

Say, the S&P; lost some 20% in a bear market year, and the “talented” manager “only” lost 18%. This performance would most likely elevate him to hero status in the perverse way Wall Street keeps score.

If you had owned the fund that lost “only” 18%, would you be feeling like a hero too?