Should we buy Asia Indexes if Kim Jong-un does something REALLY STUPID?

[Cheesehead]

I'm not much for the stock market, I have 17% of our nest egg in US Index and 5% in International Index, I'm 60, DW is 56. We lost 45% in the crash and just recently got back to where we were, so I have no love for Wall Street. I don't believe in timing the market. But...

I'm a news and history junky and this idiot running North Korea, what if he does something incredibly stupid and there's an intense short war or hot situation? I've been in the DMZ there, it's basically a fence and some minefields, one NK numbskull could set the whole region on fire, even accidentally. Wouldn't the South Korean/Asian indexes plummet? If so, would that be the time to move cash that is not doing anything into an Emerging Asian Index like Fidelity's FSEAX?

FSEAX Quote - Fidelity Emerging Asia Fund - Bloomberg

We have a lot sitting in cash and I didn't want to buy into the US market at present high levels so logically it seems like this could be the time to move cash, if there is a plummet? Does this logic make any sense? As I said I don't know much about stocks, timing, emerging markets but I do think things could accidentally spin out of control based on recent history.

And if my theory did work out, how would you know when to get out? I made a lot of money with Y2K stocks but lost it all when they plummeted after the New Year, so I swore off timing the market once before.

Don't like the idea of making money on misery but it seems to be a no brainer, unless I'm missing something? I have no wise uncles to ask. Thanks for your learned opinion.

 

[Midpack]

I don't believe in timing the market.

I completely agree with you up to this point.

 

[Cheesehead]

Well, I have all this cash, about 35% of our nest egg and it is doing nothing. The rest is barely keeping up with inflation in bonds. So...this idea was just a gleam in my eye.

 

[REWahoo]

So...this idea was just a gleam in my eye.

Try some Murine® eye drops...far less risk.

 

[Midpack]

I'm not much for the stock market, I have 17% of our nest egg in US Index and 5% in International Index, I'm 60, DW is 56. We lost 45% in the crash and just recently got back to where we were, so I have no love for Wall Street. I don't believe in timing the market. But...

Well, I have all this cash, about 35% of our nest egg and it is doing nothing. The rest is barely keeping up with inflation in bonds. So...this idea was just a gleam in my eye.

You didn't enjoy losing 45%. Your AA is conservative (only 22% in equities?). You're not kids in the accumulation stage. You don't believe in timing.

And you're asking about an investment idea that's 'swinging for the fences' riskwise. You knew the right answer all along...

BTW - how many times has NK threatened SK, the US or others before - without anything happening? Let's hope this is just another one of those chest beating episodes...

 

[Cheesehead]

I guess I'm just so itchy to invest it somewhere. I have made money in Fidelity emerging market and select funds before, I just never knew when to get out.

 

[growing_older]

I understand the idea of buying on dips and if you had an asset allocation plan that included some Asian market equity that you thought you might pickup if there was a significant drop, then there might be some logic to your plan. There would be nothing you could do about it but wait and be ready if the buying opportunity presented itself.

But I think what you are discussing is something different entirely. You seem to be suggesting that you can predict at least a short term market movement in case a certain event happens, and you want to be in position to speculate on that. It's not investing if you do that. It's speculating. But if you do think you want to take such a gamble, why would you mess around with index funds. Wouldn't you do better to find the highest leverage or cheapest option or some other play that would really allow you to swing for the fences. If you want to gamble some money on your vision of future events, why not do so in a way that gives the biggest payout?

 

[samclem]

First, there are multiple-hundreds of people who are paid to do nothing else but figure out what NK will do. And it's nearly impossible. If you agree with that, then you'd want to make your bet after the "event" when the affected equities/sectors have already been beaten down. In effect you'd be betting that the markets have over-reacted to the news and that the beaten-down share prices will recover quickly and you'll make money.

If you want to do that, recognize that it is pure speculation. I'd only bet a little, and I'd suggest you do what growing-older suggests and find something highly leveraged.

If you do it, don't feel bad about "profiting over someone else's misery". That's not what you are doing. You'd actually be helping to support the share prices of distressed equities, which is a useful thing. Personally, I think you are unlikely to be successful.

Let's all hope nothing like this comes to pass. As those who have been there know, Seoul is within artillery range of NK. And the number of these artillery pieces pointing south is amazing. The Korean people as a whole have had a full bucket of misery within the lifetimes of many of those now living, and those living in North Korea have endured generations-long forced privation and repression of a kind found nowhere else on earth. The only good thing that could come from any hot conflict is an end to this state of affairs. Finally.

 

[haha]

First, there are multiple-hundreds of people who are paid to do nothing else but figure out what NK will do. And it's nearly impossible. If you agree with that, then you'd want to make your bet after the "event" when the affected equities/sectors have already been beaten down. In effect you'd be betting that the markets have over-reacted to the news and that the beaten-down share prices will recover quickly and you'll make money.

If you want to do that, recognize that it is pure speculation. I'd only bet a little, and I'd suggest you do what growing-older suggests and find something highly leveraged.

If you do it, don't feel bad about "profiting over someone else's misery". That's not what you are doing. You'd actually be helping to support the share prices of distressed equities, which is a useful thing. Personally, I think you are unlikely to be successful.

(To the OP) Some of the easiest money ever made is reacting in a contained way to these events, once they have happened and there is a large market reaction. I am not interested in this one, so I have not done any research. But if you plan to, get going and study the whole situation -Korea, Japan, Singapore, Hong Kong. Remember that this may be a situation made for options, depending on what the political event does to implied volatilities.

If this kind of analysis does not interest you, abandon the project now. There will come a time to find a way to invest your money in a low risk way according to your desires.

If you have money, one of life's real pleasures is bit of gambling. The assertion that this is pure speculation is absolutely true. But so is almost all of the investing we can do under current interest rates and equity valuations. Because something is stodgy does not make it an investment. We thought we were investing in 2007 when we bought index funds, obviously what we were actually doing was to speculate by going long on the continuance of unusual situations in business profitability and oil prices and many other things.

People "invest" in gold, which is one of the purest speculations there is, no income, relatively small industrial usage, etc. But people also "invested" money into AAPL at $700. Did they expect to receive cash flows over time from this company suffient to amortize their investment and also give a profit commensurate with the obvious risk? No, they expected some greater fool to buy it from them at $900. Which while always possible, is more of a speculation than an investment.

Ha

 

[heeyy_joe]

What do you mean if he does something stupid? Do you mean stupid beyond his "normal" stupid? (rhetorical)

 

[haha]

What do you mean if he does something stupid? Do you mean stupid beyond his "normal" stupid? (rhetorical)

Well, he has done little. But so far his Daddy and the ruling clan has done what few other nations with a similar GDP could do. Tell the US to go to hell.

Ha

 

[heeyy_joe]

Regarding you Asian fund question, IMO you would be better with a their Pacific Basin fund.

 

[HighRoller]

what if he does something incredibly stupid

Like opens his mouth again. Hopefully that is as far as it goes.

 

[Brat]

The fact that Chinese diplomats ignored NK suggestion that they leave NK is telling. If NK starts doing anything more that talking they are in a position to yank their cord. The last thing China needs is refugees from NK fleeing their direction and they will if the locals believe that war is imminent.

Watch to see if NK political or military leaders travel to China in the next couple weeks. That will be the sign that China has had its fill of this nonsense.

 

[ERhoosier]

The fact that Chinese diplomats ignored NK suggestion that they leave NK is telling. If NK starts doing anything more that talking they are in a position to yank their cord. The last thing China needs is refugees from NK fleeing their direction and they will if the locals believe that war is imminent.

Watch to see if NK political or military leaders travel to China in the next couple weeks. That will be the sign that China has had its fill of this nonsense.

I tend to agree with this China-as-older-wiser brother philosophy, EXCEPT that I do not see how China became better off by allowing this bizarre bunch in NK to develop their own nukes Makes me think China does not have the influence over NK that many think it has.

Re- investing in Asia on a major dip with NK action: I would only speculate on that with little $$ I could afford to loose.

 

[Brat]

Initially their relationship was a partnership between fellow Communists. As time passed and NK became wierder it took the position that if you don't help us this country will implode and our people will flee your direction. Starting a war isn't what China wants or needs.

For the life of me I don't understand why their intel service doesn't start trimming that family tree.

 

[samclem]

The fact that Chinese diplomats ignored NK suggestion that they leave NK is telling.

I dunno. I'm pretty sure the diplomats themselves didn't get a vote.

 

[sengsational]

Seems to me that when it's obvious that emotions are driving the market, that's the best time (if ever there is a good time) to employ a "market timing" strategy. Won't people soon come to their senses and realize it's not such a big deal, the world will go on, minus (tragically) some people and some buildings, and that we'll all spend an extra 20 minutes in the airport taking off our shoes? Humanity is resilient.

 

[dmpi]

What if: Kim Jong himself shorted that market and he's just trying to "talk" it down so he can profit.

 

[Mill]

What if: Kim Jong himself shorted that market and he's just trying to "talk" it down so he can profit.

This is a military-first regime. Kim jung un doesnt have any money to buy the market. It all went to [-]nukes[/-] energy.

 

[Texas Proud]

I guess I'm just so itchy to invest it somewhere. I have made money in Fidelity emerging market and select funds before, I just never knew when to get out.

Basically this is your problem.... you don't get out....


You set up an AA, determine what funds etc. will be something that fits this AA and invest... you do some rebalancing if things get out of whack and that is it... you don't swing for the fence... you don't invest in the newest 'hot stock', (add any other phrase here)....

Now, if you have a testosterone account... sure, why not.... but I would not be doing this with my main investments...

 

[calmloki]

Study is the answer. Thinking that Kim is trying an upgraded Duchy of Grand Fenwick ploy.

 

[heeyy_joe]

Study is the answer. Thinking that Kim is trying an upgraded Duchy of Grand Fenwick ploy.

Or he is bluffing!

 

[AndrewJackson]

Kim Jong Un is a complete figurehead. I would suspect prince william has more authority than this little twirp. He had a western education and enjoys spending spare time with Dennis Rodman and the Harlem Globetrotters. There is 0 chance this guy is pressing any big red flashing buttons. zero. The military calls the shots in this situation.

 

[MooreBonds]

I tend to agree with this China-as-older-wiser brother philosophy, EXCEPT that I do not see how China became better off by allowing this bizarre bunch in NK to develop their own nukes Makes me think China does not have the influence over NK that many think it has.

While China may have been strange bedfellows with Kim Jong Il, they didn't have control over him. It would have been in NK's best interest to develop their own nuke capability to use it to threaten the West and get bribes (as well as for their own military might), and I doubt China could have done anything too overt to 'force' NK to abandon nuclear capabilities, since you can only push a self-obsessed neighboring dictator so far.

Besides - China isn't really an ally to the US, so having a regional nuclear state (with one hell of a military) on your 'side' is kind of a plus to China with the balance of power equation, even if NK is run by someone that may appear to be at times unstable.