Top Picks 2007: Vardy sees financial revolution in Sweden

Posted Jan 2nd 2007 8:30AM by Steven Halpern
Filed under: Newsletters, ETF Investing

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

iShares Sweden ETF (NYSE: EWD) is the top speculative idea for 2007 from Nick Vardy, editor of The Global Bull Market Alert.

He explains, "Political revolutions can mean big stock market gains. The Reagan revolution unleashed an era of strong economic growth; ditto for the United Kingdom, Ireland, and Australia, where economic reforms were followed quickly by big bull markets and big profits for investors who got in on the game early.

"Such a political revolution just happened in Sweden, where the Social Democrats were voted out of office. After holding power for 65 of the past 74 years, Swedish voters opted for an economic model that looks a lot more like Maggie Thatcher than Scarlett Johansson.

"The agenda of the winning center-right alliance is to lower taxes, deregulate the economy, and sell state shareholdings in listed companies, which will clear the way for cross-border mergers or acquisitions of listed companies. Investment bankers already have descended on Stockholm.

"Ericsson's CEO, Carl-Henric Svanberg, and other key industrialists are firmly behind this agenda. Market reforms also will give a big boost to the Swedish crown -- the nation's currency. Such currency appreciation will serve as an additional tailwind to the returns of U.S. investors.

"Make no doubt about it -- Sweden is in play. Through the iShares Sweden ETF, you'll be buying into Swedish companies such as Ericsson and Volvo. Swedes already have benefited from some deregulation of the nation's telecom, auto, and banking sectors during the 1990s. But the impact of the expected new reforms could dwarf those effects."

To see Nick's favorite conservative idea for 2007, click here.