"Of Mutual Interest,"-Jan Van Eck, Partner, Van Eck Global
Tuesday, November 04, 2008JEFF YASTINE: In tonight's "Of Mutual Interest," the rebound in stocks over the past few days has been good news for many mutual fund investors. Tonight a look at some funds and ETF's that have bounced back in a big way. Among them are funds and ETF's run by Van Eck Global: Van Eck Emerging Markets, Van Eck International Investors gold, Market Vectors Russia and Market Vectors Steel. All have racked up solid double-digit gains over the past week, although they still have a lot of ground to make up from losses in past months. And Jan Van Eck is a partner in Van Eck Global. He joins us from New York. Jan, welcome to NIGHTLY BUSINESS REPORT.
JAN VAN ECK, PARTNER, VAN ECK GLOBAL: Thanks, Jeff, it's good to be here.
YASTINE: Much of your firm's focus is on foreign stocks and markets, yet in many cases those markets have dropped even more than the Dow or the S&P. Why not stick with U.S. stocks instead?
VAN ECK: Well, our fundamental belief is that every investor should own some international stocks and the reason is really twofold. Their performance is better. It's been 12 percent a year this decade as opposed to U.S. stocks, which have been flat. But it's really based on the overall economic picture that shows that emerging markets are a majority of the world economic activity and their growth rates are significantly higher, about 5 to 6 percent a year compared to ours that maybe this year 1 percent if we're lucky.
YASTINE: So you're saying that for investors they have to ignore this extreme volatility, which we rarely see in the foreign markets anyway and focus on that broader longer uptrend over a period of years?
VAN ECK: Exactly, that's how you've made money.
YASTINE: Many emerging markets like Russia, their major oil and commodity producers, especially their focus on oil and the weakness of course we've seen in those prices, if you expect that to continue, isn't that likely to be a drag on emerging markets like Russia for some time to come?
VAN ECK: The global recession, if you want to call it that, will definitely put a damper on commodity prices in the intermediate term here, there's no doubt about that. The emerging markets are made up of some winners and losers from the lower commodity prices. Russia is a bigger (ph) loser. They're probably the most dependent on natural resources for their income. But China and India, two of the other big giants and Brazil as well, actually are beneficiaries from cheaper commodity prices and should help their economies, just like it'll help us.
YASTINE: So there's some winners and some losers in that particular play. Let's talk about gold funds. You have many of those in Van Eck Global. Gold is supposed to be a safe haven for investors in times of uncertainty, but we all saw when commodity prices tanked, gold went down as well. What's the rationale at this point for investing in gold?
VAN ECK: Gold in the short term is very unpredictable. But if you started this year with gold you are pretty happy because it lost only 8 percent versus a lot of other investments that lost a lot more. And gold shares have actually been one of the best performing assets classes this decade. Not a lot of investors own gold, Jeff. For those that do, this is certainly not a time to sell, in our view, because you have this threat of inflation coming from the increased spending in Washington and that's a good reason to hold gold for the next couple of years.
YASTINE: Jan, if there were one fund to buy in your group that would participate in this broader upturn in the global economy, what would it be?
VAN ECK: In our group I'd buy our hard asset producers ETF. It's a commodity producers fund.
YASTINE: All right Jan, thanks for your insights. My guest, Jan Van Eck of Van Eck Global.
GHARIB: Tomorrow, political economist Tom Gallagher joins us to discuss what's next for the new president.
