Magazine Cover Curse Part II

"Sell when Business Week's cover says buy" is an old Wall Street maxim. Magazines are notorious for latching onto and publicizing trends, fads or investment concepts just before they end. With that in mind, it's been slightly over a year since we first visited India via the India Fund. "Magazine Cover Curse" March 3, 2006. India had been featured on the cover of Newsweek in that week's current edition. With that in mind we took a look at the India Fund (IFN) which back then had appreciated something close to 100% in the past year. We wondered out loud whether the magazine curse might begin it's ugly work.


The Results? From the time of the article's publication until early May the Fund appreciated almost 24%. It then became a victim of last Spring's global sell off. Unlike other markets, the India Fund never recovered. It is currently trading 25% below where it was when Newsweek ran its feature and almost 40% below last Spring's highs. Below is IFN's chart on a weekly basis.

Although India still carries higher valuations relative to other emerging markets it is approaching oversold levels in most of the time frames we follow. While we would regard this as something inappropriate for all but our most aggressive accounts and we would not be buyers yet, India is flagged now in all of our watch lists for possible purchase in the future.

A note: I bring up India and the India Fund as an example of part of our methodologies for managing client assets. Nothing in this post should be construed as a recommendation of any sort to purchase/sell or hold this security. Investing in emerging markets brings about different levels of risk that may or may not be appropriate to your investment portfolio. Please consult your own investment advisor with respect to the appropriateness of this investment. While no client or principle of Lumen Capital Management, LLC currently holds a position in this security, this could change at any time.