For as big as the India stock market is, there are surprisingly few ADRs. So, 30 years ago when I first began to invest there, the only realistic way to do so through a closed-end fund or a mutual fund that tracked the market. I made money buying IFN, because foreign markets generally offered decent returns in those days. Then I got involved with bonds and dropped stocks and funds entirely, because the money from them was comparable on a risk-adjusted basis, and the work hours were far more reasonable. I could waltz into the market when I chose, run my screens, buy or not, and then be done for a couple of years (or decades).
Note: In bond investing, youâre either making a bet on the level/direction of interest-rates or the level/direction of an issuerâs credit-worthiness. The former is mostly an institutional level game better left to the big boys. The latter is just a variation of what any responsible, fundamentally-oriented stock investor does, with this dif. Bonds mature. Stocks donât. If you can do financial statement analysis, youâve got the skills needed to buy your own bonds, and the only problem is finding marketable lots appropriate to your account size.
Anyhow. A couple weeks ago, I took another look at India and saw there were now 19 ETFs to choose from. So I bought a basket five that seemed to offer good diversification and reasonable returns. The positions mostly went sideways to down for a couple of days, as often happens. But then, as everyone saw yesterday, the India market jumped on news. However, it didnât follow through today as it should have if the prospects for India stock prices really had changed. So I dumped the project and went flat. Also, though yesterdayâs market canât be bought, much less last yearâs, in the past couple of years the India market just hasnât offered the gains that could have been made from the less problematic things I had begun edging into a couple years earlier. So I had to admit that my wanting to invest again in India was more a vanity project done for the sake of bragging rights than a serious effort to put money to work.
Yeah, for sure. Sometimes those vanity projects pay off handsomely. E.g., in May 1995, the US was threatening a trade war with Japan, and Japanese stocks were rolling over. But my bet was that the threat was just bluff and buster, given that the two markets were so intertwined. So I began building a position in disciplined, measured amounts, using a mutual fund that seems no longer to exist. Over the course of the next six weeks or so, I averaged down five times, which is a real No-No. But every time before I added, I would check my thesis and would confirm that it was still sound. Also, I had set a limit on how much money I would risk on the project.
Two days after I had made what I had decided would be my final installment purchase, or about the third week in June, the Japanese market bottomed and turned around. Within two weeks, I was ITM on the trade and sitting in the cat birdâs seat. By late July, the financial press finally caught on to what was happening, and Barrons ran an article with the title something like, âIs Now a Time to Get Back into Japan?â I laughed, of course. They were late to the trade, as the financial press always is. But I couldnât yet sell for there bring a mandatory, 90-day holding-period on the mutual fund. When I cleared that date and sold in mid-Sept, I doubled my money.
One might ask, âHow often do those kinds of setup happen?â. Iâd say, âFar more frequently than anyone has time to respond to them in a responsible, disciplined manner.â So the only real question is this: âDo you want a portfolio, or a life?â When youâre younger and trying to build wealth, youâve gotta work the hellacious hours it often takes to make your money grow. But once youâve made âEnoughâ, you can choose your projects. So Iâm backing away from investing in India in favor of something easier to do.
