The March 2023 Keppler Emerging Market Strategy is at www.kamny.com/wp-content/uploads/EM_Update_2023-02-28.pdf
There is no change in the Keppler Developed or Emerging Market country ratings this month. The Top Value Model Portfolio continues to hold the eight “Buy”-rated markets Austria, Germany, Hong Kong, Italy, Japan, Norway, Spain and the United Kingdom. The eight “Buy”-rated emerging markets are Brazil, Chile, China, Korea, Malaysia, Mexico, Poland and Taiwan.
According to Keppler’s analyses, an equally weighted combination of these markets offers the highest expectation of long-term risk-adjusted performance.
There is a lesson in Keppler’s Developed Market review. Many investors the error of confusing short term news with with long term thoughts.
We can see the lesson in the United Kingdom. Whilst that country is undergoing significant short term political and economic strife, the UK stock market was the best performing developed stock market in the world over the last 14 months, rising +13.7 %, The US market fell over 12%.
The nature of stock markets is to rise long term. We, as investors can depend on that, as much as we can depend on anything when we invest.
Short term, however, the rises and fall of markets are unpredictable.
The trick is to hold a diverse spread of equities for the long term. But we alos need to hold some cash.
I explained this to a reader who recently sent me this note.
Gary, Financially I am a bit confused. I don’t see how my ETF portfolio will keep its real value over the next ten years even after compounding since the government continues to devalue the dollar.
In the meantime, my cash in the bank is losing value every day, so I plan to buy short term treasury bonds at about 6% for about 45 days to offset the devaluation.
Here’s my reply. Long term, stock markets have always risen faster than inflation. The trick is to hold these investments for the long term. This often requires cash. Be sure to hold enough low paying cash investments (CDS, short terms bonds. etc.) so you never have to sell appreciating assets, such as shares, during a down cycle.
From this point of view cash is part of your inflation fighting portfolio. Your share investments will rise long term. Your cash protects these long term investments so they can be held long enough to beat inflation.
Good value to you all!
Gary
