One Night in Bangkok

That is a song from my younger days that I now wonder why I ever listened to. It is also appropriate for the almost grizzly dislocation that could have ensued had the honchos in Thailand not pulled an Emily Litella on their idea for capital restriction, all in an effort to prevent the baht from getting too strong.

The Thai Fund (TTF) is actually up 5%.

If this was actually going to happen I imagine emerging markets, as an asset class, would have been pounded today. Investors with too much exposure to emerging markets got a break. Do you have too much? Are you feeling overly lucky? That is not where I would want to be. I tend to believe 15-20% is too much in emerging. Finding out the hard way that you have too much is not fun.

A reader asked for my take on the fundamental weighting versus cap weighting debate and linked to an article on Morningstar on the topic. Well, no shock that Morningstar is dubious but not completely dismissive, great.

I have faith in the concept of fundamental indexing. I have one WisdomTree ETF close to across the board and I am using a couple of others in situations where individual stocks are not ideal, some smaller accounts also own DVY. I also use one of the Rydex equal weight sector ETFs for some accounts and some of the theme ETFs too, like the water ETF.

I don't think that using just one method is the right thing to do. I am a fan of WisdomTree but would never use their funds exclusively in any type of account. I have written all along that I believe in seeking out the best product for each type of holding. For Ireland and Norway that means a common stock, for a given sector that might mean an ETF, for India (for now) a CEF and so on.

The ETF I think is the best for water today may not be the best product a year from now. I mentioned using one equal weight ETF for a small number of accounts. That is obviously new and, to me, preferable to the cap weighted products out there.

I think a blend of different products (for folks that only use products) can, if done correctly, give similar price appreciation, slightly better yield and a little less volatility than just buying SPY. I am not visualizing heroic returns with that comment but more the chance for a slightly smoother ride. I do not think that putting everything into just one concept, like all the equal weight funds, can do this. If similar price moves, slightly better yield and a little less volatility is possible is will come from blending.

The gang over at Wallstrip is looking at Suez today and they found an article of mine from Motley Fool from two years ago, funny.