Comments on: Why I’m Not Crazy About Emerging Markets http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/ Investing and Personal Finance Sat, 11 Feb 2012 17:11:02 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Choosing Asset Allocation | Quest For Four Pillars http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-3239 Choosing Asset Allocation | Quest For Four Pillars Sun, 27 Jan 2008 02:31:14 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-3239 [...] well in the past several years that it’s hard for me to justify buying them. I’m also not convinced that emerging markets are all that great an investment. When you consider the exposure that a lot [...] [...] well in the past several years that it’s hard for me to justify buying them. I’m also not convinced that emerging markets are all that great an investment. When you consider the exposure that a lot [...]

]]> By: ThickenMyWallet http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-81 ThickenMyWallet Tue, 12 Jun 2007 21:40:51 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-81 Some large blue chip companies now divide out sales by geography so you can see how much exposure they have in the emerging markets. I believe (and don't quote me on this) that GE now has more revenue from outside NA than inside NA. I'll write a blog soon about China and why I am deadly afraid to invest there. But CC is right that if you spread your risk geographically, your downside risk will be minimized from the structural issues of investing in emerging markets. Some large blue chip companies now divide out sales by geography so you can see how much exposure they have in the emerging markets. I believe (and don’t quote me on this) that GE now has more revenue from outside NA than inside NA.

I’ll write a blog soon about China and why I am deadly afraid to invest there. But CC is right that if you spread your risk geographically, your downside risk will be minimized from the structural issues of investing in emerging markets.

]]> By: FourPillars http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-80 FourPillars Tue, 12 Jun 2007 19:02:22 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-80 Haha...that site is for late at night after the kids have gone to bed. Haha…that site is for late at night after the kids have gone to bed.

]]> By: Canadian Capitalist http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-79 Canadian Capitalist Tue, 12 Jun 2007 18:21:39 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-79 On an unrelated note, I clicked trading goddess website through the link on the main page (from my office). Big mistake. Very nice pictures, but could get me into trouble at work :) On an unrelated note, I clicked trading goddess website through the link on the main page (from my office). Big mistake. Very nice pictures, but could get me into trouble at work :)

]]> By: Canadian Capitalist http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-78 Canadian Capitalist Tue, 12 Jun 2007 18:18:04 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-78 FP: I think you should eventually have market weight exposure to emerging markets because of two reasons: (1) these markets provide returns commensurate with the risk taken (not enough of a history to make this claim, but looks to be true so far) (2) Correlation (though increasing) is not perfect with developed markets, so exposure provides valuable diversification benefits. TMW is right. There are extra risks in these markets: corruption, political stability etc. are other risks, but if you get a wide enough exposure through VWO/EEM, the returns are high enough to justify the risk. These markets are so volatile that it is easy to wait: sooner or later, there will be a sale worth waiting for :) FP: I think you should eventually have market weight exposure to emerging markets because of two reasons: (1) these markets provide returns commensurate with the risk taken (not enough of a history to make this claim, but looks to be true so far) (2) Correlation (though increasing) is not perfect with developed markets, so exposure provides valuable diversification benefits.

TMW is right. There are extra risks in these markets: corruption, political stability etc. are other risks, but if you get a wide enough exposure through VWO/EEM, the returns are high enough to justify the risk. These markets are so volatile that it is easy to wait: sooner or later, there will be a sale worth waiting for :)

]]> By: FourPillars http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-77 FourPillars Tue, 12 Jun 2007 17:08:08 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-77 Thicken - now you've got me nervous. I'm wondering if there is any point to having any direct exposure to emerging markets since if you are indexed in Canadian, US, European & Asian markets, you already have quite a bit of exposure? Thicken – now you’ve got me nervous. I’m wondering if there is any point to having any direct exposure to emerging markets since if you are indexed in Canadian, US, European & Asian markets, you already have quite a bit of exposure?

]]> By: FourPillars http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-76 FourPillars Tue, 12 Jun 2007 16:54:49 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-76 Good point Thicken, however it's tough to measure how much exposure you have to emerging markets through domestic companies. Fact is, if you have exposure to Canadian commodity producers then you probably have a lot more exposure to China & other emerging markets than you might want. There are probably a lot more examples of that sort of thing. Good point Thicken, however it’s tough to measure how much exposure you have to emerging markets through domestic companies. Fact is, if you have exposure to Canadian commodity producers then you probably have a lot more exposure to China & other emerging markets than you might want. There are probably a lot more examples of that sort of thing.

]]> By: ThickenMyWallet http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-75 ThickenMyWallet Tue, 12 Jun 2007 15:42:29 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-75 My largest issue with emerging markets is financial transparency. In some markets there is none so the market is not sure whether the financials being reported are accurate are not. I always believe the safer way to play emerging markets is to buy domestic companies that have large foreign holdings- at least you know what you are getting. My largest issue with emerging markets is financial transparency. In some markets there is none so the market is not sure whether the financials being reported are accurate are not.

I always believe the safer way to play emerging markets is to buy domestic companies that have large foreign holdings- at least you know what you are getting.

]]> By: Canadian Capitalist http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-74 Canadian Capitalist Tue, 12 Jun 2007 12:28:02 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-74 I am holding off on getting exposure to emerging markets as well. The asset class does not offer enough of a return to justify the risks at current prices. Remember last spring? Emerging markets tanked 25% (they've since recovered and gone higher) but how many markets routinely lose a quarter of the value in a matter of weeks? I always find it ironic that investors worry about a falling US dollar but not about the huge risks in these equities. I am holding off on getting exposure to emerging markets as well. The asset class does not offer enough of a return to justify the risks at current prices.

Remember last spring? Emerging markets tanked 25% (they’ve since recovered and gone higher) but how many markets routinely lose a quarter of the value in a matter of weeks? I always find it ironic that investors worry about a falling US dollar but not about the huge risks in these equities.

]]> By: FourPillars http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/comment-page-1/#comment-73 FourPillars Tue, 12 Jun 2007 11:15:39 +0000 http://www.moneysmartsblog.com/why-i%e2%80%99m-not-crazy-about-emerging-markets/#comment-73 I couldn't agree more. There was a study of US stock returns by Ibbotson looking at returns from 1925 to 1991 or so and they concluded that small cap stocks had higher volatility and higher returns than large cap stocks. It seems logical but I'm not sure if that's always the case. Mike I couldn’t agree more.

There was a study of US stock returns by Ibbotson looking at returns from 1925 to 1991 or so and they concluded that small cap stocks had higher volatility and higher returns than large cap stocks. It seems logical but I’m not sure if that’s always the case.

Mike

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