Some readers, especially one that emailed me last week, may be shocked to hear that this morning I sold Telecom New Zealand (NZT) across the board and swapped into another foreign telecom stock.
The new name is not so important but the sale might be. Anyone who wants to be critical of me for not selling it a couple of weeks ago would be justified. There are some issues with New Zealand that have created problems of late for the currency and the stock market. New Zealand has a large current account deficit which is not new. The rate hikes are slowing down which is also not new. The yield advantage NZ enjoys may narrow quite soon. There has been less issuance of kiwi denominated bonds.
None of these are new so I would have thought that they would all be priced into the market but that appears to not be the case. There is visibility for the kiwi to go down to $0.60 or even $0.58. I have kept NZT for the last four-cent drop in the kiwi but don't want to hold it for the next six cents if that is what happens.
This move is a tactical move that will either be right or wrong but I fully expect to be back into NZT at some point before the year ends. I have not lost faith in New Zealand's role in a portfolio but if I can miss a big chunk of a big decline, I will make that trade.
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2 comments:
Interesting.......isn't that the whole point of spreading your portfolio around on a global basis? To reduce the risk of holding an all US$ portfolio? Some currencies will work in your favor, others will not. Seems kind of futile to try to time currencies. Funny, i have been watching NZT fall the last couple of days thinking it is looking very attractive. The yield is massive and population dispersion in NZ makes a nice barrier to entry.
you've been reading this site since the beginning so you know how rarely I do this type of thing.
The path seems very clear to me, not that I can't be wrong.
I can hide out in another foreign telecom in the mean time.
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