Profile | Roger Nusbaum
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A Kick In The Baltics?
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Credit for the title of that post goes to the Lex column in the Financial Times as the chart below shows. This morning I am working on rolling a position I have in short term Norwegian debt from 2009 maturity out a couple of years. At the same time I see today’s Lex column which reminds us of how bad things are in the Baltics these days.
In Latvia GDP shrank by 18%, in Lithuania 13% and in Estonia the shrinkage was 16%. There are other smaller countries in Europe that are also in dire straits these days. I write a lot about foreign investing as I am convinced that future investment success for US based investors hinders on foreign investing.
That does not mean blindly throwing money at anything. While Latvia, Lithuania and Estonia are obviously difficult to access at this point the rest of Europe is not but the rest of Europe (specifically on the continent, Scandinavia is healthier) looks like it could be worse off than the US.
If you use broad based products you need to look under the hood and see what is there. Do you really think that a fund heavy in Europe and Japan is the best way to add foreign to your account these days? At some point probably so but that would not appear to be now.
It is easy to say you should have more foreign and there are more and more choices all the time but actually building an effective allocation it will require more work than many folks might be used to. At a minimum success will require going to the country level and understanding the dynamics of those countries. There are surplus countries and deficit countries, commodity and service based, developed and emerging, exporters and importers and so on. These differences need to be understood and proactive decisions need to be made to blend the various characteristics in the portfolio. In the last couple of years owning the surplus countries has been the better trade but that will not always be the case. At some point Latvia, Lithuania and Estonia will be attractive destinations.
Not easy but essential nonetheless.
