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Published: June 6, 2009
When the financial
crisis began to turn into a full-fledged bear market last fall,
few investments escaped the downdraft. But perhaps one of the
more surprising drops was felt in the foreign currency markets.
As investors clamored to the safety of dollar-denominated U.S.
Treasuries, the relative value of the U.S. dollar soared. This
eventually pushed almost every world currencies to near-historic
lows. For instance, in late January, the British pound hit a
25-year low against the U.S. dollar.
The precipitous fall of commodities prices was a little more
understandable -- although certainly just as painful for
investors. Oil prices had hit a record price of $147.05 per
barrel in July 2008. We tend to remember oil's high price
because we were all stuck filling our gas tanks with $4/gallon
gasoline.
But oil wasn't the only commodity to hit new highs last year.
Aluminum and copper also hit record prices last summer. When
commodity prices tumbled, the metals fell the hardest.
But these two trends are starting to reverse. As the market
launched into its springtime rally, investors began to abandon
the U.S. Treasury market and foreign currencies started to
rebound. And metals, which many argued were oversold, also began
to recover.
In the chart below, you can see the fall of both the value of
Australian dollar and the London Metals Index through the latter
part of 2008 and the start of 2009. But starting in late
January, both foreign currencies, like the Aussie dollar, and
metals prices began to rebound.
This has been very
good for foreign stocks trading as
American Depository Receipts (ADRs) and the foreign funds
and ETFs that trade on U.S. exchanges. As the value of the U.S.
dollar falls, the value of foreign assets rises.
This has also been good for metals stocks or funds concentrated
in metal-related companies and commodities.
But it has been
especially great for all the
Stock of the Month newsletter subscribers who bought
into the fund I recommended back in April. This fund is getting
the full benefit of both rebounding trends. I bought this fund
for my "Real Money Portfolio" only after I gave my readers a
chance to get in first. I never front-run my investment
recommendations. I'm up +26.6% on this investment so far and I'm
locked into a 15.1% yield. Of course my readers are doing even
better.
I still love this investment and look forward to even bigger
gains as foreign currency valuations and metals prices continue
to improve. And it's not too late to lock in this fund's hefty
11.9% yield.
If you'd like to learn more about this fund -- and the other
Stock of the Month ideas that have "double play" potential --
just visit this link.
Always looking for the next great idea....
-- Amy Calistri
Chief Investment Strategist
StreetAuthority's Stock of the Month |
