|  SEP 1993

Trading International Funds by Joe Duarte

Trading International Funds by Joe Duarte How do you participate in the price movement of the international stock markets using an overseas mutual fund? The 1990s have become the true decade of market globalization as the world's governments and major industrial entities seek private capital to refinance debt accumulated during the 1980s. This almost insatiable desire for capital has both prolonged and increased the volatility of bull markets in stocks, bonds and currencies. With the advent of 24-hour trading, currency interactions and major global political shifts, most investors and traders require an intricate knowledge of international markets to profit in these parlous times. Previously in STOCKS & COMMODITIES, I described several methods by which mutual fund investors can profit from global market volatility by shifting their asset allocation between stock, bond and currency funds. Two concepts are central to my method: 1. Keep abreast with current events to pinpoint potential trading opportunities. 2. Search for relationships between major market indices and mutual funds. Because of the potential difficulties in trading international stocks (such as illiquidity and a dearth of individual company information), I prefer to trade mutual funds. My approach is to find an underlying index and a mutual fund that mirrors the index's movements, thus enabling me to use mutual funds as stock index proxies.

by Joe Duarte, M.D.