Marketwatch has an interesting arcticle about 4 of the more contrarian investment managers around and their take on the current market environment: Jeremy Grantham (GMO), Bob Rodriguez (FPA Capital and FPA New Income), John Hussman (Hussman funds), and Steve Leuthold (Leuthold Funds)

I make it a point to always read Jeremy Granthams investment newsletters even though he has caused me to lose some sleep with his predictions about certain investments. He has been a believer in emerging markets for quite some time now but has recently changed his position.

Notably, just a few weeks ago Grantham turned negative on his “beloved” emerging markets, which had been a spot-on bullish call. “If the global economy is going to disappoint, the cost of holding them just seemed too high,” he said.

John Hussman runs the Hussman Growth fund which is what I like to call a “poor-mans hedge fund”.

For Hussman nowadays, risk-taking doesn’t offer much reward. “We’re fully hedged,” the fund manager said, meaning that a portfolio won’t be affected, positively or negatively, by market gyrations.

And ever the contrarian Steve Leuthold has actually turned positive towards equities…

Now Leuthold’s allocation-driven portfolios are covering short positions and other hedges and moving from a neutral, 50-50 equity/bond allocation toward 60% stocks — nearing their 70% maximum threshold.

“Our whole office is surprised,” Leuthold said in an interview “This is quite a departure for us. I don’t believe I’ve ever seen such a dynamic change, going from mildly negative through neutral to pretty positive.”

Seems like everybody is getting on the Frontier Market bandwagon.  Back on July 17th Wisdom Tree launched the Middle East ETF (GULF). 

Index Description:

The WisdomTree Middle East Dividend Index is a fundamentally weighted index that measures the performance of companies in the Middle East region that pay regular cash dividends on shares of their common stock and that meet specified requirements as of the index measurement date. Companies are ranked by market capitalization, and the 100 largest companies by market capitalization are selected for inclusion. Companies are weighted in the Index based on dividends paid in the annual cycle prior to the index measurement date. Country weights are capped so that no country’s weight in the Index exceeds 33% at the annual measurement date.

There is no doubt that times are tough right now.  The markets are extremely volatile and by many meausures we are experiencing a bear market.  With the threat of a recession overhead, inflation pressures rising, unemployment creeping up, and equity markets struggling mightly there is plenty of reason to worry. 

But there is no reason to panic.  Now is not the time to make any rash desicisons that you (and your portfolio) will come to regret in the near future.  I’ve seen quite a few articles on this very subject lately.  Here are a few:

Better Think Twice - [Marketwatch] - warns of the perils of raiding a 401(k) account, taking out a reversve mortgage and cashing in that life insurance policy.
Read the rest of this entry »

I’m always looking for those inefficient and under-followed areas of the market for places and things to invest in.   In the past its been timber and commodities, but now I’ve got a new one.  It’s not that new to many people but it is definitely not something that many people are investing in…yet.

I’ve long been a fan of Emerging Market equities in my portfolio and now I’ve started to get into a small subset of Emerging Markets called Frontier Markets. 

Turns out there are very few options to get your frontier market fix.  The Eaton Vance Structured Emerging Markets fund invests a small percentage in what they consider frontier markets, but the majority of the investments are in emerging market countries.  Fidelity just launched the Fidelity Fidelity Emerging Europe, Middle East, Africa (EMEA) Fund (FEMEX) in May.  And T. Rowe Price launched the T. Rowe Price Africa and Middle East (TRAMX) fund in September 2007. 

There are also 2 ETF’s that invest in Frontier Markets.  The Claymore/BNY Mellon Frontier Markets ETF (FRN) that tracks the The Bank of New York Mellon New Frontier DR Index and the PowerShares MENA Frontier Countries Portfolio (PMNA) which tracks the Nasdaq OMX Mideast North Africa index. 

Next up a comparision of each investments underlying strategy.  Stay tuned.

Good interview on Barron’s with David Winter

After 18 years at Franklin Mutual Advisers, where you had become chief executive, chief investment officer and president, you left to start Wintergreen. Why didn’t you start a hedge fund instead, where you could earn an annual management fee of at least 1%, and keep 20% or more of annual profits.

I didn’t feel comfortable with the incentive structure of a hedge fund because it seemed to incentivize you too much in the short run. Also, a lot of the money was very short-term in nature. And if there was a lesson from Max Heine, it was to think long term and don’t go where the crowd goes. The mutual-fund industry had gone through the scandals of 2003 and ‘04 and had largely, in my opinion, become an index-hugging enterprise really dominated by marketing as opposed to investing as its primary motive. So I had this epiphany, and I called my friend Liz Cohernour to tell her that we could put together a global value, no-load mutual fund with maximum investment flexibility. (Cohernour, Wintergreen’s chief operating officer, handles the business side of the firm while Winters heads up the investment side, which includes two research analysts.)

It’s no secret that I’m a fan of timber investing.  I’ve been looking for awhile on how to get timber exposure into my portfolio.  First I bought some Plum Creek Timber, but that didn’t work out so well. 

I’ve even contemplated the new Timber ETF, but that has the same problems that Plum Creek has.   It’s just a larger collection of companies that invest in timber related products such as paper, pulp, and packaging but not timber the pure asset.

So now it turns out my favorite idea (and one I tried unsuccessfully to invest in) has run into some problems getting up and running.  The Wells Timberland REIT has had to ammend its mezzanine financing that was put in place to make its first purhcase.   Check out the latest 8-K for details.

Apparently Wells has had a tough time making the schedule principal reduction payment to Wachovia and CoBank.  While they get to push back the repayment dates somewhat it comes with a high cost.  Turns out this new ammendment raised the interest rate paid from 9% to 11% annually.  Ouch..that hurts.  

Since the funds raised weren’t enough to pay for the funds first purchase (hence the need for mezzanine financing) it creates questions to if this fund will survive.  Seeing the underlying financing troubles can’t give prospective clients a good feeling.  Maybe I was “lucky” not being allowed to invest in this last year.  Only time will tell…

There has been a lot going on in the international equity space lately. 

Harbor International was named International Manager of the Year by Morningstar.  The Hakan Castegren lead fund has had more than just a good year.  Check out the long term track record of this fund and you will see how good they have done.

Dodge and Cox is launching a new Global (combination of U.S. and International stocks) fund and also reopened (Feb 4th) their excellent Stock and Balanced Funds

Also Dodge and Cox International decided to hedge some of their exposure to the Euro and Pound Sterling.  This is the first time the fund has done any currency hedging and they made it known that they don’t take such steps lightly.

Marketwatch posted an article about the T. Rowe Price Africa and Middle East fund that was launched last year.

Middle Eastern countries, seeking to diversify oil riches, have long been major investors in the world’s leading industries. Now the Middle East itself is attracting interest from intrepid U.S. investors, who see a region with rapidly growing, well-run businesses and an ambitious goal of becoming less reliant on the oil that has made it so wealthy.

Access to these frontier markets has become easier and cheaper for buyers in the past few months. One of the newest offerings comes from T. Rowe Price Group Inc.

Speaking of Frontier Market funds, Fund Alarm mentioned that Fidelity is about to launch a new Emerging Europe, Middle East and Africa fund

Fidelity Emerging Europe, Middle East, Africa Fund seeks capital appreciation by investing in companies located in “emerging Europe, Middle East and Africa issuers and other investments that are tied economically to the EMEA region.” Manager is Adam Kutas, who has worked at Fido since 1996 as “a research analyst and manager,” though it’s not clear what he managed. Expenses capped at 1.25%, minimum investment of $2500.