Emerging Markets

  • 13 Dec
    Worried About The Chinese Financial System? Read This

    Worried About The Chinese Financial System? Read This

    • Investors tend to shy away from complex situations because they are difficult to understand. However, complex situations are exactly where the outsized profits lie for those who are willing to dig deeper.
    • The Chinese financial system has two sides, a scary one and a strong one.
    • There is one thing China has that no other market economy has.



    Introduction

    I’ll start this discussion with the story of American Express (NYSE: AXP) and its 1963 salad oil scandal.

    Anthony “Tino” De Angelis, a former commodities broker, figured that he could trick inspectors by putting just a few feet of salad oil in his containers and make it look like the containers were full as the oil floats on top of sea water. This allowed him to borrow huge amounts against the salad oil collateral. At one point, the oil market crashed and it was impossible to cash in on the collateral as there wasn’t any. More →

  • 06 Dec
    This Is Why You Need To Think About Dividends

    This Is Why You Need To Think About Dividends

    • Dividends and inflation have accounted for 99.7% of returns from 1929.
    • A global look at the dividend environment shows that there are excellent opportunities for dividend growth.
    • The dividend environment has also been distorted by the accommodative central bank policies as yields are very different now, while the companies paying them aren’t that different.



    Introduction

    Back in October, I wrote an article that discussed 8 charts that show how the stock market doesn’t always go up.

    Aside from these charts, I discussed the research of Professor Emeritus Edward F. McQuarrie, from the Leavey School of Business at Santa Clara University. What’s interesting from his research is that he found that dividends and inflation contributed to 99.7% of investing returns since 1929, which is a mind-blowing number. More →

  • 27 Nov
    This Is Why International Diversification Is So Important

    This Is Why International Diversification Is So Important

    • The 30% international revenue exposure the S&P 500 offers isn’t enough.
    • It’s possible to add significant returns and lower your risk when investing internationally.
    • A look at economic health and fundamentals will show where it’s best to invest now.



    Introduction

    An often overlooked part of investing and portfolio strategies are currencies.

    The easiest way to look at it is to say that it all evens out over time and that the only thing important is to be diversified. By owning the S&P 500 or companies that have global revenues, we could say that a portfolio is well diversified. More →

  • 06 Nov
    This Is Why You Need To Be Invested In Emerging Markets

    This Is Why You Need To Be Invested In Emerging Markets

    • In investing, having a strong tailwind is perhaps more important than picking the right stocks.
    • Finding good stocks in emerging markets isn’t that difficult, and plenty of them trade on U.S. exchanges.
    • It all boils down to fundamentals. Rebalance accordingly between developed and emerging markets.



    Introduction

    I’ve talked a lot about investing in emerging markets, but I’ve never assessed emerging markets from an holistic perspective.

    Today, you’ll read everything you need to know about investing in emerging markets. It’s extremely important to know why to invest in emerging markets, and then to understand the best way how to do so because not every investment in emerging markets is going to do well. More →

  • 04 Oct
    The New Silk Road Will Change Everything – Here’s What You Need To Know

    The New Silk Road Will Change Everything – Here’s What You Need To Know



    • What’s going on in Asia isn’t news that sells. But the consequence is that we are poorly informed about the groundbreaking One Belt One Road project.
    • Lack of and poor information doesn’t allow for proper capital allocation and international diversification.
    • We’ll discuss what’s going on in Asia and how you can profit from it by buying foreign but also domestic stocks.

    Introduction

    What we’re mostly focused on now will probably be completely irrelevant in a few years and will almost certainly be in fifteen years.

    Most of the market related talk now focuses around possible tax reform or similar incentives. As these are short term factors and the economy offers no free lunch, nobody knows how those probable measures will actually impact the economy and stocks. More →

  • 11 Sep
    Out Of This World Debt Levels Will Damn Future Generations

    Out Of This World Debt Levels Will Damn Future Generations

    • Debt levels are the key driver of economic growth in developed countries. So keep an eye on debt.
    • The velocity of money, household debt, car loans and sales aren’t telling a good story.
    • Globally, the situation isn’t much better. However, there are a few exceptions.

    Introduction

    In today’s article, I’ll analyze the current global debt environment.

    Debt is an economic factor that is unwatched as long as things are going well but as soon at things turn south, everyone will be screaming about a debt crisis and the end of the financial world as we know it.

    Given this, it’s extremely important to know what is going on, how sustainable the current debt levels are, what the impact of debt on the economy is, how to position your portfolio, and perhaps even how to take advantage of potential black swans arising from future debt instabilities. More →

  • 30 Aug
    Air Travel Is Booming – Here’s The Best Way To Invest In The Trend (And No… It’s Not Airlines)

    Air Travel Is Booming – Here’s The Best Way To Invest In The Trend (And No… It’s Not Airlines)

    • It’s interesting how global economic activity is shifting more and more toward the east.
    • Air traffic is expected to continue to grow at more than 6% per year. However, this doesn’t mean that any related investment will do well.
    • Good investments will be those with limited or no competition. Think airports.

    Introduction

    When investing, you want to be exposed to growing trends not declining ones. Not that investing success can’t be found in declining industries, but focusing on growth sectors simply increases your chances for a positive return and lowers the possibility of a negative return. Thus, increasing your expected return and lowering your risk.

    One such almost certain long-term trend is the growth of the global airline industry. More →

  • 23 Aug
    The Practical Approach To Constructing An All-Weather Portfolio

    The Practical Approach To Constructing An All-Weather Portfolio

    • Creating an all-weather portfolio is pretty technical. Today, I’ll try to make it as practical as possible and give actual investment examples of where to invest.
    • It’s all about risk. Counter to general knowledge, bonds carry large risks at the moment.
    • I’ll describe 4 different investments that will behave differently in 4 different economic scenarios, but all of them offer a yield all the time.

    Introduction

    Two months ago, I wrote a pretty detailed technical article on how to build an all-weather portfolio. The results were quite discouraging as a huge part of the portfolio would have ended up in short term bonds, especially treasuries.

    In today’s article, I want to deviate a bit from the pure technical side and approach the creation of an all-weather portfolio from a practical side that includes actual stocks to buy and doesn’t put as much in treasuries. More →

  • 18 Aug
    The Bear Case To Investing In China

    The Bear Case To Investing In China

    • The first risk is a possible contraction in the Chinese credit cycle.
    • However, any kind of interest rate spike leads to immediate PBOC intervention.

    Introduction

    I have been pretty bullish in my previous articles about investing in China as I think it’s a positive risk reward situation. Nevertheless, a positive bull case wouldn’t be fair without looking at the risks China carries. So in today’s article we’ll discuss the main risks plaguing the Chinese economy and stock market. Understanding the specific risks will also help in better positioning your portfolio to the ugly things that might happen and carefully selecting the stocks that will be less affected. More →

  • 02 Aug
    Want To Invest In The Indian Economic Boom? It Isn’t Easy, But Sven Shows You How It’s Possible

    Want To Invest In The Indian Economic Boom? It Isn’t Easy, But Sven Shows You How It’s Possible

    • Investing in India isn’t easy as many Indian investments won’t benefit from Indian growth.
    • Indian ETFs won’t benefit either while valuations are a bit high.
    • There is a third option.

    Introduction

    If you read yesterday’s article on economic growth projections per country, you know that India has an unmatched position in the world. It has a young and more eager population, a huge labor cost advantage, relatively good education, a low starting point, and issues that can be resolved like corruption and a large geography.

    The country is growing at around 7% per year and is expected to continue to continue growing at that rate for the next few decades. There will of course be ups and downs, but the long term trend is extremely strong. More →

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