June 12, 2006

Why Stops are Important - especially in Broken Markets.

The Templeton Russia Fund (TRF) has been around a long time.

The last great boom that began in 1996 carried the stock to 65 from a low of 15.

It ended in mid 1997 with the Asian currency crisis and BOTTOMED AT UNDER 8 after the Long - Term Capital Management Crisis (LTCM). Yes - remember those lovable geniuses.

This boom which began right after LTCM has carried TRF to the upper 90's. It has been an 8-year boom this time, with more speculation and loose money than EVER.

It is HIGHLY UNLIKELY that the drop from 97 to today's 54 is suddenly over based on the financial cocktails that have been brewing since 1998.

You need some perspective and some good money management (ability to take small losses and try again) if you want to catch a falling knife - in this case country.

I will be shocked if we do not here of some banking or hedge fund crisis in the next 24-48 hours. Until that type of announcement, every rally will be sold off. The big money smells a carcass in these markets and is piling on top of the redemption sales. Trust me on this.

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