My Four Rules for Investing in Asia
1. Buy-hold-and-pray won't work . For the last four years, even dart-throwing monkeys made money investing in China. Going forward, I think investors will need to be more nimble. Don't hesitate to take profits after large moves, and use defensive strategies like protective stop losses to manage risk.
Just last week, for example, I instructed my Asia Stock Alert subscribers to move up their stop losses on Siliconware Precision Industries and MEMC Electronic Materials. I think those two companies have extremely bright futures, but we've doubled our money in only nine months! It only makes sense to protect our profits.
2. Don't ignore more focused investments like ADRs. Exchange-traded funds have exploded in popularity, and they're an excellent way to get a diversified stake in specific countries or regions. However, don't shy away from great individual companies, either. Some wonderful firms make it especially easy for U.S. investors by listing American Depositary Receipts (ADRs) on our exchanges.
3. Pick the right sectors and industries. In my opinion, one of the keys to profiting from the Asian growth miracle is concentrating on the right areas. For a full description of my top three investment areas, read " My Favorite Ways to Invest in Asia ."
4. Don't get stuck in just one country. While China's stocks have bounced like a super ball, many other Asian markets are still on sale. And as I mentioned earlier, a lot of them have spectacular growth prospects.
In fact, I've already booked my next trip to Asia to visit some of these countries in person. Every trip I've made to Asia has led to great gains down the road, and I think this one will be just as rewarding. Stay tuned!
Best wishes,
Tony Sagami
Source: Marketoracle
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