Keanu Reeves Calls Market Bottom

I know it's not (supposed to be) a comedy, but there were a few scenes in The Day the Earth Stood Still that really cracked me up.

Watching Keanu Reeves' alien character solve complex biological equations was certainly amusing. And the scene where Keanu conducted a lengthy, deliberate, and completely unnecessary conversation in Chinese was absolutely priceless. But for my money, the funniest moment of the movie occurred shortly after Keanu's giant space egg landed in Central Park.

After displaying images of people praying, looting, rioting, and fleeing major population centers, the television pauses on the financial channel, where we see several major stock indexes are trading down between 50% and 70%.

50%? That's it?

Aliens have landed. The end of the world is nigh. And stocks are only down 50%?

In many major markets across the globe, stocks are already down 50%! And that can only mean one thing …

The end is near
Brazil's Bovespa index is down about 45% from its 52-week high. India is off 55%, and China's SSE Composite index has fallen 66%. Meanwhile, Russia's RTSI index has plummeted 75%. In other words, these markets are acting as if the end of the world (or in Russia's case, an even worse scenario) is imminent.

The logical takeaway here depends on what type of person you are. If you believe Earth's days are numbered, then I suggest you stock up on canned goods and cross as many items off your bucket list as you can. However, if you think that the chances of the earth's demise are about as likely as Keanu snagging the "best actor" Oscar, then your course of action is clear: It's time to start buying international stocks.

But aren't international stocks risky?
Sure. But if you only remember one lesson from the market meltdown of 2008, let it be this one: All stocks are risky.

Is Bank of America (NYSE: BAC  ) safer than HDFC Bank (NYSE: HDB  ) because it's based in Charlotte rather than Mumbai? Is General Motors (NYSE: GM  ) safer than Toyota (NYSE: TM  ) because it's based in Detroit? Do I really need to answer that question?

A company isn't inherently riskier or more difficult to understand just because it's based outside the United States. Take my favorite foreign play at the moment as an example …

Bottoms up!
International stocks come in all shapes and sizes, or in the case of Diageo (NYSE: DEO  ) , flavors and proofs. This London-based beverage maker dominates the top shelf of the spirits industry, with eight of the world's top 20 premium spirits brands, including Guinness, Baileys, Smirnoff, and Johnnie Walker.

I've written before that thanks to this unrivaled brand power, Diageo was able to negotiate exclusive distribution rights in the United States, meaning only one agent per state can distribute its products. This strategy ensures that the brand won't be diluted, and it helps pad the company's hefty 30% North American operating margin. Diageo's international presence is no slouch, either. The company has operations in more than 180 countries, and sales are growing at a double-digit clip in Latin America, Africa, and the Middle East. Plus, steady demand for Diageo's spirits has helped the company pour free cash flow back to shareholders. Since 2000, the company has paid out roughly $11 billion in common dividends and repurchased a staggering $14 billion worth of shares.   

Despite all these positives, shares are trading about 35% off their yearly highs. At a dividend yield of 5.4%, it's well worth a look here.

Ready to go global?
Not sold on Diageo? Don't worry -- there are plenty of great companies all across the globe set to benefit from some serious tailwinds.

Many foreign economies are poised to grow at rates that the U.S. will likely never see again. Take China, for instance. The World Bank recently cut its 2009 GDP growth estimate for the country -- to 7.5%. That would be the slowest pace of expansion for China since 1990.

Meanwhile, experts predict that the U.S. economy will shrink by about 1% next year. In fact, U.S. GDP hasn't grown by 7.5% since 1989! Based on that information, which stock would you rather own: Verizon (NYSE: VZ  ) or China Mobile (NYSE: CHL  ) ?

I hope you chose the latter. And I hope that if you're intrigued by the idea of international investing and would like to learn more, you'll consider taking a free 30-day trial of our Motley Fool Global Gains investment newsletter. You'll get our advisors' best bets for new money now, as well as the team's key takeaways from its recent research trip to Asia. Just click here for more information.

Rich Greifner would rather see the world come to an end than sit through another screening of The Day the Earth Stood Still. Seriously, that movie was awful. Rich does not own shares of any company mentioned in this article. Bank of America and Diageo are Motley Fool Income Investor recommendations. HDFC Bank is a Global Gains recommendation. The Fool has a disclosure policy.


Read/Post Comments (19) | Recommend This Article (158)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 08, 2009, at 4:20 PM, missmolliemcgee wrote:

    Invest in China? Thanks but no thanks. As a consumer, I try to navigate through the sea of Chinese made toxic products, trying to avoid them. Until the stock markets aren't just a giant Ponzi scheme for the benefit of the organized crime cartels that run our government now, I am staying out of the market. I would rather invest locally in young entrepreneurs who can actually improve life in our country. Invest in local community somehow.

  • Report this Comment On January 08, 2009, at 4:21 PM, skully201 wrote:

    Dear Mr. Greifner,

    Spread the news. The market bottom is not here yet. We held a seance and asked John D. and he said "not yet".

    I will let the housing debacle play out a few more months.

    Skully

  • Report this Comment On January 08, 2009, at 5:02 PM, FLGUY1 wrote:

    I 'took China', American Oriental Bioengineering (AOB) a "Hidden Gem", to be exact. Went down approx 22% TODAY. Seems they decided to spend $70M, 1/4 of their annual income, to buy a piece of real estate for a convention center. In CASH yet. In their downgrade from hold to sell today, Piper Jaffray was very kind calling managements decision "disappointing". They couldn't find anything to buy that might improve their profitability I suppose.

  • Report this Comment On January 08, 2009, at 6:28 PM, synergydance wrote:

    Great. Just what I wanted from the company I'm supposed to rely on for sound financial advice: Someone who really knows how to . . . make fun of Keanu Reeves.

    I can make fun of Keanu Reeves on my own, thanks. And I would -- except that I actually kinda like him, plus there SEEM TO BE BETTER THINGS TO BE GOOD AT at this moment in the history of web journalism, don't you think?

    I could be wrong. But then, that's what they pay me for. Some coincidence if that was your deal, too, eh?

    Roger

  • Report this Comment On January 08, 2009, at 6:46 PM, TMFBomb wrote:

    HIghly entertaining, Rich...I guess we'll have to tack on savant to what we normally call Keanu.

  • Report this Comment On January 08, 2009, at 8:19 PM, Factrender wrote:

    The quantity of email I receive could be a lot less if all financial advisors followed the rules of brevity and stick to business. I don't appreciate daily ramblings where the headline teases to be opened then forces the reader to wade through cute allegories and whimsical humor before getting to the point. The "trust me" attitude of advisors assumes all of us are equally knowledgeable about investing in foreign stock, exchange rate risks and tax implications. If I don't understand the risk I'm not interested. I do know enough not to find comparability in Verizon or China Mobile.

  • Report this Comment On January 08, 2009, at 9:22 PM, halrow wrote:

    China Is HUGE growing nation...They use huge amounts of DRY BULK commodities...Iron ore

    is a main commodity china imports over seas and shipped vis Bulk Vessels as provided by Paragon

    Shipping Inc PRGN..When China and other countries

    rsume constant shipping of many dry Bulk commodities,The Baltic Dry Index is expected to

    climb to the top of the index chart from the bottom .

    Thats when the Dry Bulk Shippers will grow the share price from recent market bottoms....Signes of this

    BOUNCE BACK has already begun with the easing

    of banking credits .....Feb 09 may be big for shippers. Check all info out @ Forbes.com

  • Report this Comment On January 08, 2009, at 10:27 PM, courtneTHEgreat wrote:

    within the next eight days... something big will finally happen. The market's sideways movement is sickening....

  • Report this Comment On January 09, 2009, at 11:56 AM, oversea wrote:

    I sold all my Chinese shares on the eve of the Olympics. I'd be very carefull about investing in China now, the social unrest there is getting worse.

    More than The Day the Earth Stood Still it looks like The Rocky Horror Picture Show to me.

  • Report this Comment On January 09, 2009, at 1:29 PM, greenwave3 wrote:

    Keanu Reeves: "Whoa!"

  • Report this Comment On January 09, 2009, at 4:22 PM, bloghorn wrote:

    I don't trust Chinese accounting. Or Indian accounting or much US accounting. How about British accounting? Haven't had any British financial scandals lately. Same for Canadian accounting.

    But back to China. I don't expect the Chinese accounting firms to police businesses any better than the Chinese government polices product safety.

  • Report this Comment On January 09, 2009, at 5:42 PM, EnigmaDude wrote:

    good article - thanks. I am grabbing up shares of shipping companies and energy stocks because I too believe that China will not stop growing any time soon! (or India, or Brazil, or Japan for that matter).

  • Report this Comment On January 09, 2009, at 8:13 PM, rickb119 wrote:

    Halrow,

    You might also check out EXM GNK and DRYS. From a strictly technical point of view, they look much better (to me) than PRGN.

  • Report this Comment On January 10, 2009, at 8:49 AM, wuff3t wrote:

    I can't help feeling you are underestimating Keanu Reeves. After all he must be good at something...

  • Report this Comment On January 12, 2009, at 2:08 PM, 23USMC wrote:

    not trying to nitpick but the markets in real life are dow about 50% over the course of several months. in the movie they dropped 50% in that one single day. we never came close to that so its kind of an apples to oranges comparison.

  • Report this Comment On January 17, 2009, at 11:03 PM, steveGL wrote:

    I'd stay well away from HDFC. It's the Indian equivalent of Fannie Mae.

  • Report this Comment On January 21, 2009, at 9:18 AM, doms76 wrote:

    Any update on the lead statement above, now that the DJIA dropped the greatest amount in inauguration day history? Kind of like the recommendation to buy Schwab.

  • Report this Comment On February 11, 2009, at 3:26 PM, violetfox wrote:

    Surely there are people more deserving of criticism just now than Keanu Reeves - perhaps if you think really hard for second you could name a few. It also seems more than a little mean-spirited to take a nearly unnoticeable moment from a film as a flimsy excuse to take a shot at him. I guess that says a lot more about the writer than it does about Mr. Reeves.

  • Report this Comment On March 06, 2009, at 6:38 PM, MikeMark wrote:

    Sorry, 50% is nothing. From 1929 to 1933 stocks declined 90%. This boom has been larger in every way. This bust is likely larger too.

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