Trading Country Funds

The following is just notes to myself, not advice to anyone else, on the theory that, if I can explain it to someone else, I can explain it to me. ROTFL

Most American investors stick with their home market, and there are good reasons for doing so. E.g., even an stock that’s an American icon, like MCD, makes a lot of its money overseas (though not so much in Russia these days as before. LOL) But country funds have always intrigued me, especially exotic markets like India, Pakistan, Nigeria, Turkey, and I’ve always bought a few shares of them, as much for bragging rights as to turn a hoped-for profit. But this coming year, I’ve decided to launch a serious campaign and to make country funds one-third of what I trade. (Another third will focus on commodities. The remainer will be Chef’s Choice.)

The list of country funds at Seeking Alpha is as good a place as any to begin. Countries | Seeking Alpha

The one change I’d make is to swap in RSP for EUSA --their choice to represent the US market-- for RSP being more liquid. But the rest of the list is good enough for a beginning. In fact, as of market open, I’m now long two on the list and ITM on both and up on my commodity trade as well, and cut my loss on an industry bet at (-3.3%).

What you’ll find, if you pull schedules of holdings for the funds, is that some of the funds do give access to a broad sample of the companies domiciled in a specific country. Others are just the usual cap-weighted nonsense, which means that --if you don’t look under the cover-- you might be making a very focused bet on just a few stock, such that, you’d be better off just buying the ADRs directly and trading them instead.

What you’ll also find is that some of the funds are extremely illiquid, not that that problem doesn’t have work-arounds. Related to that, of course, is that spreads for some of the funds are extremely wide.

A third problem is “co-variance”. Many of the funds don’t track much differently than the US market. Hence, buying them offers little diversifiation. Which those are is easy to discover by doing comparison overlays or by building correlation matrices. (Here’s a link to the easiest place to do that. Asset Correlations)

Now we come to which chart(s) to use for trading the funds. I think two are needed, but just two: one for ‘analysis’ and one for ‘execution’. Let’s 'consider analysis first.

You want to be buying the foreign markets that are out-performing the US broad market --for which an equal-wight SP500 index might be a fair proxy, but not a cap-weighted version, 25% of whose current performance is due to just 7 or 8 stocks. But you want to be buying the ones offering a truly positive return, not just the ones not doing as badly as the US market. LOL

BarChart offers three comparison indicators. It’s Chef’s Choice which you choose, if any. My preference is the Mansfield Indicator (used by my investing/trading hero, Stan Weinstein). Here’s an example chart.

(to be con’t. I’ve gotta grab breakfast.)



Bought EWT because of TSM ( I follow the Semiconductor company) and buy and sell when EWT rises $ 1.25 for some lunch money going back to 2002. INTC since 1989. Lately INTC (since last October) is on the rise because INTC wants to build a huge plant in Israel.

Look at the gauge on the right-hand side. Fitty cent increments.

How am I doing with INTC. I started my career back in 1966 as a Microelectronic Semiconductor Layout Designer Designing complex state of the Art computer chips as well as Standard Cell Libraries as well as Input / Output Cell Libraries and Standard Block Cells. Got laid off on May 1st , 2007 at High Noon.
My company sent many many chips to TSM to produce the chips artwork,

Doc, look at all the FREE lunches I get at Wendy’s (WEN) plus a Free Forstie.


intc is on a crazy rise. i have AMD and its doing well too. Watching AMD for a sell flag. also bought yesterday HRTG, PERI and TAST which all have risen today. Added to MARA today as it doubles up. Watching the flags in the morning and at 2:30 central time every day for a flag…doc

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Why not just trade TSM directly?

AMD’s Next GPU Is a 3D-Integrated Superchip

Try and have at 3 semiconductor company’s in your portfolio as a forever group. INTC, AMD, NVDA, TXN, MU, MCHP. Buy and Sell per the rulez for you shall be a very wealthy person. Stay focused.

I had to buy MCHP since January of 2007. Now I make more money than being employed by one of their Subsidiaries.

Quill -

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I did buy TSMC (TSM) back in 2002 along with EWT.
The following chart is yearly. My company at the time could not keep up with the supply of computer chips, so we shipped all the tapes to TSMC. In the beginnng it took us 2 hours electronically transmit from the East Coast to Taiwan for just one Chip. We shipped a chip a week at times. Mostly revision chips or just layers.

Another good ETF to Swing Trade is SMH for the long haul. I knew SMH was around, but my plate was full chasing and building my Dividend portfolios then forgotaboutit.
SMH chart is Quarterly.

Quill -

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You didn’t answer my question of why buy both EWT and TSM? You don’t have to answer it, of course, for everyone having their own reasons for making investing/trading decisions. But buying both isn’t something I’d have done, because the two are highly correlated. Hence, I’d be just making the same bet rather than obtaining any diversification.

I’d say the same thing of buying both SMH and TSM. Why do it?


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You might have misunderstood.

EWT is a country we invest in from your huge list of countries. and TSMC is the world’s largest Semiconductor company located in Taiwan we invest in.

Hsinchu a city in Taiwan where TSMC is headquartered.

When I was in the Navy, our ship belonged to the COMPATAIWANPATROLFORCE with an Admiral on board of which I worked for his Intelligence group.

We were home ported out of Kaohsiung City at the Sothern tip of Taiwan in rotation with 4 other Seaplane Tenders. The Admiral and staff moved from ship to ship when one ship has completed its tour. then conducted operations in Vietnam for a tour there and headed for Whidbey Island Washington.

TSMC is trying to move out of Taiwan as fast as possible and setup shop in Arizona before the CCP (Chinese Communist Party) take over all of Taiwan.

China wants all of TSMC’s buildings and production facilities. China’s semi’s are the bottom of the barrel as far as production.

Taiwan Semiconductor Manufacturing Company produces chips for Apple’s iPads, iPhones, Watches, and Macs. Its Apple production facilities are located in Shanghai, Taiwan, and Washington state.

The top chip manufacturers in Taiwan

ASE Technology.
AU Optronics.
LITE-ON Technology.
United Microelectronics.
Nanya Technology.

Quill -



Everyone will have his or her own methods of investing and trading. That’s because each of us brings to the task our own unique means, needs, and goals (And our own ways of making mistakes. LOL) For me, diversifcation is a useful tool that does two things. It creates opportunities that might have otherwise been overlooked. It can be become a means to manage risk.

Create a line chart for EWT and overlay a line chart for TSM, thusly.

They track closely enough to be the same bet, with TSM being the admittedly better one. Now consider the reason why. TSM makes up 22% of EWT’s holdings. To buy ETW is make a bet on TSM, not a bet on the broad national economy of Taiwan. Thus, the other 78% of EWT’s holdings are mostly irrelevant to what EWT does or doesn’t do by way of making or losing money, because those holdings individually are such a small fraction of the total compared with TSM

Again, if you want to buy both ETFs, do so. But EWT gets struck off my list of country funds, because it isn’t a country fund, It’s just a closet bet on a specific tech company. The fund that tracks Brazil suffers from the same problem, as does SPY these days.

Why do I worry about this? When the US econmony crashes --and it will soon-- and the US market crashes, I’ve got two choices: sell short, or look to places and assets that aren’t highly correlated to the US. I’d prefer to do the latter if I can.

But don’t believe me that a crash is coming. Your buddy, Ray, predicts one.


Thank you for your service Quill. I was in the Navy back in the early 70’s and served under COMCRUDESFLOT6 in the Mediterranean. That hasn’t helped me in my investing however…doc

Thank you for your service Doc. I was in the Navy back in the mid 60’s.
Self-taught on how to plot the 6 OHLC stocks in black and white on graph paper I learned from two (2) investment bankers while caddying for them. Got my EOD quotes from Hong Kong and Singapore daily plus any business newspapers that I could get my hands. on.

Happy New Year and see ya around the campus.

Quill -