Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Wall Street is Screaming BUY Emerging Market Stocks

Stock-Markets / Emerging Markets Sep 16, 2008 - 12:57 PM GMT

By: Money_and_Markets

Stock-Markets

Best Financial Markets Analysis ArticleTony Sagami writes: Wow — talk about a disaster. Bad news at AIG, Lehman, and throughout the financial sector led to a world-class pummeling on Wall Street. The Dow lost more than 504 points, while the S&P 500 dropped more than 4.6%, the worst single-day decline since right after the 9/11 terrorist attacks.

Definitely stay tuned to Money and Markets for more updates on where we're going next.


What else is on my mind? Well, whenever the pinstripe suit crowd in Manhattan starts to agree with me ... I get real worried.

I start to sweat ... I begin to question my research ... And I look for every possible hole in my conclusions.

Why?

Because the Wall Street crowd is better at being a day late and a dollar short than anybody I know. And I've learned over the years, that you can make a ton of money by NOT listening to them!

It's not that they're stupid

The Wall Street crowd isn't stupid. Heck, most of them attended more prestigious colleges than I did. And they can drop more names than I ever could.

So what has me worried?

The chief investment strategist at Citigroup just recommended that investors increase their stock portfolio's allocation in foreign stocks to 55%.

Wall Street is screaming: BUY, BUY, BUY foreign stocks!
Wall Street is screaming: BUY, BUY, BUY foreign stocks!

That's way, way up from the 30% he had been recommending. And it's roughly quadruple the 12% to 15% that the typical mutual fund investor owns in foreign funds.

Why the sudden and dramatic increase?

Jeffrey Applegate, the head of Citigroup's Global Wealth Management, said: "The primary engines of growth have shifted away from the United States. Investors need to position themselves to take advantage of global opportunities."

Applegate is right ... but a little late to the party.

From 2003 to the end of 2007, the average annual return for the Dow Jones Wilshire Emerging Markets Index was 46% while the S&P 500 only returned 12.8%.

Those gangbuster returns have increased the impact of foreign stocks on global markets. According to Russell Investments, the value of U.S. stocks in the world market fell below 50% in 2005. And now they only represent 43% of the capitalization of the Dow Jones Wilshire Global Total Market Index.

If you think those oversized returns mean that investing in foreign markets automatically means more risk ... you would be wrong. According to Morningstar, the standard deviation (a measure of an investment's volatility) of the U.S. stock market was 15.4 for the past 10 years. And for foreign stocks it was 15.5.

That's right. Investing in foreign markets has no more risk than investing in U.S. stocks ... plus you get paid a lot more for doing so.

China's the best house in a great neighborhood

I think Citigroup and Russell are dead right. And investors should have a meaningful, if not heavy, weighting in foreign stocks. I may be biased. But I believe Asia — particularly China — will be the most productive part of the global market to invest in over the next decade.

I say that because the fundamental news coming out of China in the past week has been very, very positive ...

China's exports are soaring ... up a whopping 21.1%!
China's exports are soaring ... up a whopping 21.1%!
  • Chinese retail sales increased by 23.2% in August. That brings the year-to-date growth rate to 21.9%, a huge jump from the 15.7% during the same period last year.
  • Inflation is dropping in China. Consumer prices rose 4.9% for the 12 months ending in August, falling from 6.3% in July.
  • China's trade surplus for August was 14.9% higher than a year ago. And its exports surged by 21.1%.
  • Chinese officials are working on a stimulus plan for as much as 400 billion yuan (US$58 billion) in tax cuts and government spending to keep its economic train on track.
  • The 'smart' money still believes in the China growth story. Foreign direct investment pumped another $7 billion into China last month. And it's up an amazing 41.6% for the year.

Investing in Asia has never been easier

I am not suggesting that you put 55% of your stock portfolio into Asia. But I believe that you should have at least 20% of your portfolio in Asian equities. And it is easier than you may think because there are three ways to invest in Asia without ever leaving the comfort of your current brokerage firm, through ...

  • Mutual funds,
  • Exchange traded funds (ETFs), or
  • Individual stocks.

Did you know that over 100 Asian companies are listed on the New York Stock Exchange and Nasdaq? I'm talking about companies like Toyota (TM), China Mobile (CHL), Korea Electric Power (KEP), Taiwan Semiconductor (TSM), and Telekomunikasi Indonesia (TLKM.JK) to name a few.

And the time is right, too.

The Shanghai Composite Index is down by 50% since November 2007, despite the strong Chinese fundamentals. But unlike the U.S., China is still growing like a weed.

The Chinese economy has grown by more than 10% in the first half of the year. And it's on track for its sixth consecutive year of double-digit economic growth.

That combination of cheap prices and high growth has me licking my chops. And while I am nervous that the Wall Street crowd has finally jumped on the foreign stock bandwagon, I am very confident that you'll be thrilled with the results if you add more Asian spice to your portfolio today.

Best wishes,

Tony

P.S. Want to share your thoughts on the economy — or any other investment topic — with our entire Money and Markets audience? Then check out the Editor-For-A-Day contest that we're running right now

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules