Emerging Market Boom

by | Sep 30, 2007 | Archives

Emerging markets cash in on two foundations of good investments – investment value and investing belief.

Emerging investment value is the only proven feature that outperforms markets in the long run. 

Belief is required to hold investments of value if they begin to fall or if they dramatically rise but still offer good value.

One belief that has helped me reap a fortune for nearly forty years is my belief that emerging markets are catching up with major markets. This  belief has paid off for decades.  An updated review of our Multi Currency Educational Service shows how it is really paying off now.

Here is the latest review of the five multi currency portfolios we created November 1, 2006.

Portfolios 2007 Mar 27 June 28 July 20 Aug 17 Sept28
Swiss Samba 16.15% 44.80% 45.84% 15.19% 44.40%
Emerging Market 12.81% 54.31% 67.67% 30.50% 103.22%
Dollar Short 20.12% 33.81% 40.31% 9.14% 42.71%
Dollar Neutral 16.58% 37.64% 38.07% 13.56% 34.74%
Green 86.86% 178.28% 214.15% 110.93% 220.22%

Note the performance of the Emerging Market Portfolio since last November, up 103.22%.  

The 2006 model Emerging Market Portfolio we created and tracked was up 114%. 


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The 2007 Emerging Market Portfolio has a similar package of investments compared to the 2006 portfolio.  All we did from 2006 to 2007 was remove equities in Japan and add shares in Turkey and Eastern Europe. Given its current level of 103.22% appreciation, with a month to go and its momentum, there is a chance that the 2007 portfolio could even surpass the performance of last year. 

This validates my belief that emerging economies are catching up with major economies. Emerging markets have dramatically outperformed major markets for the past six years. These Emerging Market Portfolios have taken advantage of this fact.

The fact that China (up +43.8 %) and Turkey (up +41.2 %) were two of the three top performing emerging markets this year certainly has helped.

Two of the four funds that the 2007 Emerging Market Portfolio hold are the Jyske Invest Chinese Equities Fund (up 105.82% in the last year) and Jyske Invest Turkish Equities Fund (up 42.11%).  With two times leverage, a 40% rise is worth almost 120%!

The question now is whether to stick with these markets. Neither is looking bad from a value point of view according to Michael Keppler’s market value analysis. China is ranked neutral. If I had it I would hold, but I do not and will not now buy. Turkey is ranked buy! 

This is why of the few equity funds I now hold in my personal portfolio is the Jyske Invest Turkey Trust.

The fund was down 14% in 2006 which reflected the fall in that market as the Istanbul Index was down 9.22% last year. The fund is up 42.6% in the past 12 months.

But the Jyske Invest Turkey Fund is not the only way to invest in this dynamic market.

A good alternative way to invest in Turkish shares is the Morgan Stanley managed Turkish Investment Fund. This is a closed-end investment company traded on the New York Stock Exchange (code TKF).  This Fund seeks long term capital appreciation and invests at least 80% of assets in equity securities of Turkish companies. The remainder may be invested in dollar and lira denominated debt securities. 

This fund offers an easy way for small investors to get into this market. 

This New York traded fund was down last year and it is the downwards shift that creates the value that interests me.  Here is a review of the Turkish Investment Fund’s movement for the past 17 years compared with the Istanbul Stock Index.

              Annual Performance

    Year    Portfolio   Istanbul Index  

    1990     -35.71%      – 8.37%

    1991     -4.56%       -23.29%

    1992     -40.10%      -49.86%

    1993     151.74%      207.75%

    1994     -58.29%      -52.56%

    1995     – 1.55%      – 5.90%

    1996      17.22%       31.87%

    1997      65.72%      111.39%

    1998     -33.32%      -53.53%

    1999     274.06%      244.36%

    2000     -41.18%      -46.16%

    2001     -28.31%      -33.73%

    2002     -32.24%      -36.49%

    2003     118.33%      122.39%

    2004      35.90%       38.46%

    2005      65.05%       51.60%

    2006      -7.70%      – 9.22%


The volatility in this market shows why belief is important in your share selection, buying and selling process.

I believe that Turkey has a dynamic economy and is positioned to be an important part of the European Union. I believe that it offers good value now. This belief helps me ride through the many serious and lengthy drops before enjoying the phenomenal recoveries this market is famous for.

If you want to be a better investor begin by examining your beliefs. 

For example, I also believe that green investing now makes financial sense.

The 220% rise on our Green Model Portfolio reinforces this belief.

Once you have a list of ideas you believe in, you can then look for value within that belief.

Tomorrow’s message looks at ways to get in touch with investing beliefs.

Until then, good investing.



We will share our investing beliefs and introduce our 2008 model portfolios next month.  Join us and Jyske Bank at our Hotel Meson de las Flores for International Business & Investing Made EZ in Ecuador, November 9-10 and 11.