Emerging Markets

  • 22 Jan
    Sunday Edition: A “Buy It And Forget It” Diversified Portfolio With 300% to 500% Upside Potential

    Sunday Edition: A “Buy It And Forget It” Diversified Portfolio With 300% to 500% Upside Potential

    Today we are going to take a sneak peak at six globally diversified high growth companies with 10-bagger potential. Companies I believe every serious investor should own.

    But first, I want to talk about a big mistake I see most investors making, which is to “over diversify.” When you own too many stocks, your chance of outperforming the market diminishes because you become the market.

    I’ve shared with our readers before what I believe is the right number of stocks to own so that you have enough diversification to mitigate non-systemic or individual company risk, yet not own too many stocks and hamper your ability to outperform the market. More →

  • 06 Jan
    This Is Why You’ll Want To Take A Closer Look At Investing In China

    This Is Why You’ll Want To Take A Closer Look At Investing In China

    • The large GDP-credit gap in China could be a win-win; panics should be seen as an opportunity to buy on the cheap.
    • Forecasts for the yuan are negative indicating further depreciation. Don’t fight the positive dollar trend for now.
    • Some sectors are going to get crushed by China, thus it is a threat.

    Introduction

    In the last two years, China has shaken the markets twice: once when the Chinese market correction began in August 2015, and when it seemed that we were in for a Chinese/global recession in January 2016. More →

  • 03 Jan
    Do You Need To Invest In Frontier Markets To Be Well Diversified?

    Do You Need To Invest In Frontier Markets To Be Well Diversified?

    • Due to low liquidity, frontier markets are highly influenced by foreign capital inflows and outflows.
    • Political risks, exposure to oil, and variegate PE ratios advise against investing in frontier market ETFs.
    • However, there is one low risk high reward option.

    Introduction

    A frontier market is a developing country not big enough to be considered an emerging market. The term describes smaller, less accessible, but still investable markets. Such investments are considered high risk because of high volatility and lack of information.

    Small markets usually have low liquidity and are very sensitive to foreign fund flows. Capital inflows alongside positive sentiment quickly lead to a bubble. More →

  • 26 Dec
    Beware The Short Term Cycle In The Automotive Industry

    Beware The Short Term Cycle In The Automotive Industry

    • The automotive industry is expected to grow in the future. While the high barriers to entry eliminate new competition, it’s a perfect business to be in.
    • The short-term debt cycle and stretched balance sheets indicate a contraction in revenues, margins, and profits.
    • To make money with automotive stocks just follow the short-term cycle and be patient, it will hit stocks, it always does and it is close.

    Introduction

    I have recently been nagging about the negative asymmetric risk reward situation the general stock market offers. In order to give you more value, I’m going to analyze a few sectors in detail with the hope of finding the ones that will give you better risk reward ratios.

    Today, I’ll discuss the automotive industry. Many consider it extremely cheap, but valuations simply don’t want to hear about it and remain low. I’ll start with an analysis of the two cycles in the industry, continue with an overview of the fundamentals and a conclude with a risk reward estimation. More →

  • 22 Dec
    Advice On Value Investing In Emerging Markets From Mohnish Pabrai

    Advice On Value Investing In Emerging Markets From Mohnish Pabrai

    • Investing in emerging markets still offers 100-baggers, the problem is that most investors don’t stick with them.
    • Looking for 100-baggers can make your portfolio, but it can’t break it because you can only lose 100% of the investment while the upside is unlimited.
    • Great investments can be found everywhere, you just need to know what to look for.

    Looking Around The World For Value

    It gets harder and harder to find stocks that have positive future business perspectives, a low valuation, and a price to book value that gives you a margin of safety when investing. Therefore, it’s necessary to do some research on such investments at a larger scale, especially in emerging markets. One person who is a specialist on this is Mohnish Pabrai. More →

  • 21 Dec
    Should You Invest In Russia? Sven Tells You Why It Might Not Be Such A Good Bet

    Should You Invest In Russia? Sven Tells You Why It Might Not Be Such A Good Bet

    • The numbers make Russia the cheapest global market.
    • However, most of the market is made up of energy and financials, while normal companies are fairly priced.
    • Long term economics in Russia aren’t positive as the country is completely dependent on oil prices.

    Russia As An Investment Opportunity

    Russia has been the best performing market year-to-date and is up 50%. However, it’s still considered by many in the financial environment as one of the cheapest global markets as it’s still far from the pre-sanction and higher oil prices levels of a few years ago. More →

  • 20 Dec
    Be Overweight In These Sectors In 2017

    Be Overweight In These Sectors In 2017

    • Increasing interest rates make earnings growth unlikely and increase the probability for a decline of the S&P 500.
    • To beat the S&P 500, you have to invest in sectors that offer a better risk reward ratio than the S&P 500.

    Don’t Go For 10 To 20 Percent Returns In 2017

    With the S&P 500 yielding 3.85% going into 2017, stocks in general are currently an investment vehicle that gives you a small and limited upside with a potentially large downside.

    We know that the FED plans to raise interest rates another three times in 2017. If that happens, the investments people consider most secure—like treasuries, dividend paying blue-chips or REITs—will be hit the hardest because as required yields go up, their asset prices will go down. Therefore, the best way to prepare for 2017 is to position yourself so that if the FED raises rates, your upside is far bigger than 3.85% and your downside far smaller than the potential downside of the currently overvalued stock market. More →

  • 08 Dec
    Brazilian Investment Opportunities

    Brazilian Investment Opportunities

    • Many stocks in Brazil have the potential to double in 2017, but they also have the potential to lose 50%.
    • We’ll briefly describe investment opportunities and our approach to the research.
    • Emerging market volatility should be considered a great thing, not a risk.

    Investing Rationale

    Monday we discussed the current situation in South America. Reading the article, available here, will give you a good intro into what we’ll discuss today.

    The source of our long-term investment ideas comes from constant research on macro trends. These ideas are bound to benefit from positive economic, demographic, and political environments. More →

  • 15 Nov
    Finding The Equilibrium In Emerging Markets & Why You Need To

    Finding The Equilibrium In Emerging Markets & Why You Need To

    • Emerging markets are volatile and considered risky, but the economics are great.
    • We can’t fight the market without looking at the risks, but what we can do is rebalance our portfolios and do some dollar cost averaging.
    • Such a strategy allows you to grasp the benefits of great economics and lower valuations while eliminating volatility risks.

    Introduction

    Last week was very interesting for emerging markets.

    Trump’s win sent shockwaves around the world and such movements usually hit those markets the hardest that don’t have much relation to the U.S. but are considered risky and therefore, investors quickly pull funds out of those markets. More →

  • 11 Nov
    Forget About The Election Noise, Let’s Talk About China

    Forget About The Election Noise, Let’s Talk About China

    • China’s long term outlook is very positive and its debt is not worrying.
    • However, due to the nature of economic cycles, we have to expect and prepare for potential trouble coming from China.
    • When trouble will happen is anybody’s guess as many have called negative scenarios several times, but those have so far failed to materialize.

    Where China Is Now & Where It Is Going

    China is the growth motor of the global economy. It consumes about half of the global produced copper and produces half of the global steel output. This is due to the incredible GDP growth China has achieved in the last 25 years, which has averaged 9% per year. More →

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