Investing Daily

February 14 will mark the first day of the Chinese New Year. In the upcoming Year of the Tiger, investors should keep in mind that tigers often live dangerously. The ancient Chinese admired the tiger for its fighting qualities, as well as its power and graciousness, and the animal is lauded for its agility and ability to take advantage of tough situations.

Although I wouldn’t advise investors to base their investment decisions to the Chinese zodiac, success in 2010 may come to the agile, adventurous investor--provided that he or she takes measured risks. I expect 2010 will prove to be a sector- and stock-picker’s year, as opposed to the broader moves that prevailed 2009. 

Global markets performed well in 2009, as economic growth around the world defied the pessimistic views investors held earlier in the year.

But these concerns still hold, which investors should view as a positive. At the same time, the markets are much higher this year, which could complicate matters in 2010; disappointing economic growth or corporate earnings could inflict more damage this time because investors have big profits to protect.

Nevertheless, I expect global markets to start 2010 on a positive note and generate strong returns in the first quarter. The major developed economies should keep interest rates low, and gross domestic product (GDP) readings could surprise to the upside. Over the longer term, central banks’ accommodative policies could inflict harm--but this stimulus should work wonders for stocks, especially when combined with higher expected earnings.

Asia will be the key performer again--not only in terms of stock market strength but also economic resiliency. The latter is very important, as 2009 demonstrated that big emerging economies have the ability and enough financial power to withstand big economic hits, even when the latter originate in the developed world.

That being said, financial markets around the world remain highly correlated; investors worldwide will be monitoring how Asian markets perform when the next big selloff occurs.

December to February has traditionally been the most profitable timeframe for Asian equities. During this period of traditional strength, investors usually perform the best by going with the flow rather than relying on rigorous fundamental analysis. True, buying stocks based on value analysis has been a rewarding strategy over the long term--a claim that’s borne out by the performance of The Silk Road Investor’s model Portfolio--but it takes more than three months for a company’s fundamentals to affect its stock price measurably.

And readers can rest assured that we will continue to keep you apprised of both near-term developments and longer-term trends in this venue and in my paid advisory, The Silk Road Investor.

Nevertheless, investors looking for a quality Asian company to buy at an undemanding valuation should consider Hong-Kong based conglomerate Hutchison Whampoa (HK: 13, OTC: HUWHY), which also offers a 3.5 percent dividend yield.  For the momentum players, Indian automaker Tata Motors (NYSE: TTM), which recently hit its 52-week high, is a stock to hold for the next couple of months.