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Insights into Global Capital Markets: An Overview

Dive into the dynamics of global capital markets, exploring total return equations, foreign country returns, equity performance, fixed income markets, and selected growth choices. Uncover market trends, investment strategies, risks, and potential opportunities.

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Insights into Global Capital Markets: An Overview

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  1. An Update on Global Capital MarketsRonald E. Copley, Phd, CFAO: 910-452-7147E: Ron.Copley@gmail.comwww.CopleyInvestmentManagement.comNovember 5, 2009

  2. Total Return Equation Total Return Components for International Investment: • Yield--dividends and interest (income/begin price) • Growth—price appreciation (end price-begin price)/begin price • Currency Conversion—repatriation of foreign currency to US dollars Example t=0: Invest $1000 in a Euro-denominated investment (exchange 1USD:1€) T=1: Investment earns yield (5%) plus growth (10%) plus currency conversion (exchange 1USD:1/2€, or 1€:2USD) Total Return = 5% + 10% + 100% = 115%

  3. Foreign Country Returns

  4. UUP vs. GOLD

  5. U.S. Equity Performance

  6. Foreign Equity Performance

  7. Fixed Income Markets

  8. PCY vs. SHV (Exchange Traded Funds) PCY: Seeks investment results that correspond generally to the price and yield, before fees and expenses, of  the DB Emerging Market USD Liquid Balanced index. SHV:  Seeks results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays Capital U.S. Short Treasury Bond Index. 

  9. http://www.dailymarkets.com/stocks/2008/10/21/credit-default-swaps-%E2%80%93-a-disastrous-unwind/http://www.dailymarkets.com/stocks/2008/10/21/credit-default-swaps-%E2%80%93-a-disastrous-unwind/

  10. Size of the CDS Market

  11. http://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asphttp://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

  12. CIM’s Selected Choices for Growth China: • Baidu, Inc (BIDU)—Search Engine • BYD CO LTD H SHS (BYDDF)—Electric Cars US: • Apple Inc (AAPL)—Computers • STEC, Inc (STEC)—Solid State Storage Latin America: • iShares S&P Latin America 40 Index (ILF) • T. Rowe Price Latin America Fund (PRLAX) Europe/Asia: • iShares MSCI EAFE Index (EFA) • iShares MSCI Emerging Markets Index (EEM)

  13. Conclusions • Global equity markets attractive especially non-dollar denominated investments in Asia; • Global bond markets still adjusting as spreads continue to narrow (long rates declining relative to short rates); • US dollar in a long-term decline, but will not crash; • Credit Default Swaps remain a potentially large problem; • Deflation is a short-term problem, inflation a long-term problem; • Gold is an excellent hedge against uncertainties.

  14. You can find a copy of this presentation and others at:www.CopleyInvestmentManagement.com/articlesThank you.

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