Momentum is the simplest way to identify funds getting it right: Thoughts of Saltydog Investor

“A market moves in the way it moves because it does. There are more buyers than sellers or vice-versa. Just accept that it has done what it has done and move on. There is little to be gained by putting your own take onto market movements after the event.” (J.Livermore).

This of course does not apply to what might be going to happen in the future, which must always be worthy of serious contemplation.

We are possibly at a junction in the markets where over-priced technology funds might be losing their momentum, and this at a time when America struggles to maintain its position as the world economic leader in the face of competition from the East.

Is this going to be the time when China and the Asean economies move to become a self-sustaining trading bloc no longer relying on demand from the West?

Sooner or later this is likely to happen, but is this the time?

Probably not, but don’t tell me that Xi is not enjoying the disgraceful political spectacle and paucity of standards existing in America. As a result, he must surely be preparing for the time when the Yuan can replace the Dollar as the trading currency, at least in the East, if not in the world.

Not so long ago the whole world used to run on Sterling and now it is the Dollar, so things can change.

China and the Asean trading bloc countries are currently not in lock-down from coronavirus and their economies are running as normal. Their population may be poor, but it is huge.

Pay these people a little more and you generate a vast amount of money to spend on home-produced goods. In fact, it could become a self-generating economy which will not be reliant on the purchasing power of the West.

I have also read that China’s government has been accumulating large quantities of gold bullion, and its own mines are working flat out.

Presumably, this is for a rainy day in the future.

Now I do not know if there is anything serious to be read into the above, or if a change is imminent. As I said earlier, probably not, but it certainly must be worth keeping a weather eye on the sector numbers.

At the moment the China/Greater China sector, along with the Asia Pacific sector have not come to the front of the Full Steam Ahead Group in any meaningful way.

Nevertheless, I will take a small holding in the Baillie Gifford China fund which is already up 43% in the last six months, and leads the other funds in this sector. It might just be worth having a toe in the water should there be a future positive momentum change in this area.

I am pleased to see the “clean and green” Funds, ITs and ETFs continuing to power ahead.

Anybody who went into iShares Global Clean Energy has seen their money more than double since April this year. I have recently found and invested into three more funds. – Pictet Global Clean Energy, Baillie Gifford Long Term Global Growth, and Baillie Gifford Positive Change.

They have started off well, and it would be nice to see these three funds perform in a similar fashion to the iShares fund. I guess that this area must be a bubble, but it may have a reasonably long life with Sir David Attenborough, Greta, Scientists, the Media and many government leaders getting behind and leading the fight against climate change.

Trump is the major exception, but the Democratic Party nominee, Joe Biden, has already put forward his plan for ‘a clean energy revolution’ and pledged trillions of dollars. He’s currently ahead in the polls and if he does make it into office it will give further impetus to the green movement.

Let us hope their arguments carry the day as there will be only so much room in the lifeboats.
 

Best wishes and good luck with your investments.

Douglas.

Founder & Chairman
 

www.saltydoginvestor.com