OUTSIDE THE US DOLLAR

We've all heard about the lessor of two evils.

Well, with the US dollar it's more like the lessor of several evils. The US dollar index has chalked up a nice gain so far in 2013, rising more than three percent, but hardly all on it's own merits.
It's had a little help from its friends, the yen, the pound and the euro. All three of these currencies face some kind of turmoil, economic or political or both.

If you snooze you lose. And that's what politicians in the European Union have been doing for a while now. From the Cyprus crisis to Italian election uncertainties to high unemployment and heavy debt-plagued members, Euroland is looking more and more like an amusement park than a stable, confidence-instilling government.

Much of this trouble makes the US appear like a safer port in a sea of turmoil and turbulence. How much of this is factored into the jump in US equity prices remains to be debated.

An aside. We wrote about CAPE recently. So here is a link that should give you some ideas about how to play the CAPE outside the US.


 Faber, a surfer from what we read, is located in Manhattan Beach, a quaint little place about 20 miles south of downtown LA.  A lot of surfers wear ear plugs, but that doesn't mean they don't occasionally get otitis, usually the external kind. 

Ear infections can make one dizzy, particularly the internal kind, otitis media, sometimes leading to imbalance. A point of information, nothing more.

Now we don't know Faber. And we don't know whether he wears ear plugs. But on a reward-risk basis you're looking for volatility. In this case a breakout to the upside. There may be more here than you bargain for, but you should best know the settings for your risk thermostat, not Faber.  

Snoop around. It can pay sometimes to look where others fear to snoop. Just keep in mind these things are not dress rehearsals. Try not to forecast. Buy what's cheap today.
But do your homework.

Try to keep in mind that, mysterious or otherwise, something usually prevents either good news or bad news from going to infinity. John Maynard Keynes put it something like this: nine out of 10 times the worst never happens.

Yea, there are value traps. That's why some use stops. Small losses, and everyone has them, are the preferable kind. That we've already put some cash in these areas--admittedly the poor man's or, probably more correctly, the coward's way--via ETFs and mutual funds shouldn't influence your decision. Nor should Faber's.

http://blogs.marketwatch.com/thetell/2013/03/22/10-cheapest-global-markets-for-investors-willing-to-take-the-risk/