Over the last couple of years I have had a knack for finding exciting markets that have been up a lot, go up a bit further and then implode.
Iceland and Vietnam as the poster children for this.
Today ISK is at 81.41 which is lower than I have ever seen. Vietnam's stock market has cratered and inflation is around 25%.
That these markets have blown up is not the thing because that has happened before, is obviously happening now and more importantly will happen again.
If you invest in narrow themes this sort of thing will happen, I said as much in any of the posts on these places over the years.
What is important is the realization going in what the potential in either direct is. Both exposures were always small (and only for a few clients with high tolerances for volatility) which is a way to manage risk and action, although different with each one, was taken.
I'm not sure whether either one is accurately called a mistake or a bad trade as each one has positive and negative attributes but to be clear each market has blown up.
There has never been any shaking my long term conviction in both destinations but the key take away is that no matter how enamored you are with some narrow theme do not go too heavy. Depending on the overall market environment an implosion in a 2% position may not even be detectable to your bottom line.
