Emerging Market Equity Question

by | Dec 11, 2008 | Multi Currency Investing

Emerging markets will have an impact on the economic recovery ahead.

We are seeing economic times that few of us have seen before. Markets are terrified as evidenced by  the way yesterday’s 4 week US T Bills at 0% interest were snapped up by investors.

We try to understand this by looking at the past…the most obvious history being the 1929 to 1932 economic depression.

However every future is different.

One huge difference we’ll see in the recovery ahead is how the much larger global market and the development of emerging markets impacts productivity and growth.

The last two messages looked at  high value major market and emerging market portfolios.

Our studies in this course of global equity and bond markets over the past three years has shown that emerging markets have vastly over performed major markets AND emerging markets have recovered faster than major markets after down turns.

We can see this long term fact in the performance figures from the last two days of study.

State Global Advantage Major Market Fund  Total Return Per Year

Time                   Inception  5 years    3 years     1 year      3 months

MMHV                  6.59%      2.26%     -8.72%    -41.28%     -25.35%
MSCI                    4.31%    -1.06%     -10.61%   -34.41%     -22.52%

State Global Advantage Emerging Market Fund  Total Return Per Year

Inception   5 years      3 years     1 year       3 mos

EMHV                 4.25%        9.69%      -9.09%   -49.16%    -34.84%
MSCI                   1.22%        6.33%     -7.76%   -49.74%    -35.71%

This shows how emerging markets have out performed major markets…UNTIL THE PANIC SET IN.

In the last year the Morgan Stanley major markets index significantly over performed the emerging market index.

This makes sense because emerging markets tend to be far more thinly traded. During a rapid exit, by many investors, prices would fall faster.

Here are three lessons  and two  questions.

Lesson #1:  The significant (five year) history suggests that emerging markets are better places to invest than major markets.

Lesson #2: Thinner emerging markets drop faster than major markets on the way down.

Lesson #3: Thinner emerging markets tend to recover faster upon recovery.

Question #1: Will emerging markets once again recover faster?

Question #2: When will be a good time to invest in emerging makrets?

I have my opinion which I’ll share next week…but I want your ideas, questions and opinions first.

Here is your homework.

Look at the numbers above again.  Plus study Portfolio Review #1

and look at the two charts from finance.yahoo below.

Emerging Markets Chart


Major Markets Chart


Thoughts? Questions?  Send them to me at gary@yournewwpsite.com. Please put MC in the subject line so I can give your questions priority.

Until next message may all your investments emerge!


Learn more about value investing at  our courses in North Carolina,  Cotacachi or on Ecuador’s coast this winter.

Take a hike with me in the warm Cotacachi winter’s sun.


See how to attend two or three connected courses for great savings.

Stroll the sunny Ecuador beach this winter.

Ecuador beach

Jan. 16-21 Ecuador Spanish Course

Jan. 22-23 Imbabura Real Estate Tour

Jan. 24-27 Coastal Real Estate Tour

Join us for great fresh Ecuador seafood!


Feb. 9-11 Beyond Logic

Feb. 13-15 International Business & Investing Made EZ

Feb. 16-17 Imbabura Real Estate Tour

See Ecuador’s incredible scenery.


March 8-9 Imbabura Real Estate Tour

March 10-15 Ecuador Export Expedition

March 16-19 Coastal Real Estate Tour

Share some time with Ecuador’s friendly people.

San Clemente-fishermen

Better still join us all year! See how to attend our 27 courses, tours, mingos and expeditions in 2009 FREE.