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Showing posts from September, 2014

Emerging Markets: Following a Good Recipe & Using Good Ingredients

It is helpful to think of a combination of asset classes--emerging markets, U.S. or international stocks, treasury or corporate bonds, cash, etc.--as a recipe. And think of the individual funds that you own as the ingredients being used in the recipe. Both matter a great deal. And both determine the net investment results from your portfolio and how the food you eat will taste. Emerging markets as an asset class have been a better performer than either US or international developed markets in 2014. But over the prior three years Emerging Markets had fallen out of favor and an unsophisticated investor may have not had the patience to realize the increased expected returns. In October 2013 I wrote Emerging Markets and Kenny Rogers' "The Gambler," "If anything, one should consider increasing their targeted allocation to emerging markets, precisely because they have had such a bumpy ride recently. After all, price and value are inversely related. While Kenny’s song do…