This week's Barron's featured the final installment of a roundtablethat included Marc Faber's picks. I find his commentary in this event to be most useful for what I'm trying to do in terms of learning about new (to me) niches, or maybe learning a little more about a niche I've already started to study.
Faber touched on two areas of interest to me. The first was publicly-traded exchanges with his pick of Oslo Børs, which appears to trade in Norway with ticker OSLO and on the U.S. pinksheets with ticker OSBHF. The reason I say "appears" is that Yahoo Finance, which has Norwegian stock quotes on the home market, doesn't have a listing, as it usually does for the pinksheet shares. I also could not find it on the Oslo Børs site. BigCharts does know the Norway listing, and I would think Faber would know whether or not he did own shares, In any event, he said it yields 10%. I was able to find a page on the company site with financial information that I will try to look at later today.
Zooming out a little bit, I've banged the drum a few times about an ETF devoted to global, publicly traded exchanges; such a fund would, I imagine, be heavy in the U.S. exchanges; there are funds with exchange exposure, but they also take in other parts of the sector like asset managers. Broad financial exposure will be unattractive on a fundamental basis, in my opinion, for a long time. Given the severity of the meltdown (and the factors causing it), I think it will be years before things have a shot at being healthy. I am talking U.S. banks, European banks and even insurance companies; as I've been saying all along, there will be trades in these along the way -- and that won't change -- but the fundamentals seem a long way from being right.
Our financial exposure has been the same for a while with one Australian bank, a Canadian bank, a bank from Chile, one publicly traded U.S. exchange and an index provider. These are all individual stocks; at times this has been a great grouping, and at other times a fair one. In theory, these stocks could all be replaced with ETFs ... if they existed. It might be difficult to have an Australian financial sector ETF or one just for the Canadian financials, but my mix could be replaced with a commodity-based economy financial sector ETF, which would include those three countries; obviously our exchange could be replaced with a global exchange ETF -- there are enough of those to populate an ETF.
Some of the ideas for ETFs that have come up before (cement ETF, toll road ETF, fishery ETF, airport ETF, frontier market financial ETF and whatever else) certainly might have trouble catching on, but the idea behind the idea -- specialized exposures for a diversified portfolio -- is certainly not new. Many of the stocks in these little niches have been around for a very long time, and have better valuations than plenty of U.S. stocks.
Back to Faber: He also mentioned Chiang Mai Ram Medical, which is a Thai hospital that could be a part of the medical tourism theme that I started writingabout a year and a half ago. There does not appear to be a five-letter designator for U.S. trading, but anyone so inclined could get a trade done, depending on their brokerage, and this would create a ticker symbol (again assuming there is not one already). I think this theme is important; if you look up the companyon Google Finance you'll find a little info and a list of other related companies.
If it is legitimate to build a portfolio of individual stocks, and (changing examples) if a medical tourism stock could be valid in a portfolio of individual stocks, then a fund that owned a diverse selection of them would also be valid.
Plenty of people knock this thinking, which is fine for them, but I think the last decade provides ample evidence of the need to expand investment horizons in order to have a shot at adequate returns. It is not that difficult to realize that a theme has real demand behind it or that a particular country has a low debt load, favorable demographics and whatever else might make it a favorable destination. Being able to see this and choosing not to invest seems very illogical, especially when the alternative might be to hope that what worked in the '80s and '90s will work again.
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