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Emerging Markets Will Be An Attractive Buy--Later This Year
So, those of us who are already in, should just sit back and enjoy the ride? I hate to be playing around with my fund selections much. I dig down pretty deep before I buy a fund.
Hi Crash, I've got three emerging market funds ... NEWFX, THDAX and DEMAX. I am thinking of adding a little more to DEMAX as it seems to be the more interesting of the three that I own. However, I think I'll wait a while longer to see where valuations go. Many think they may have father to fall. Perhaps so ... Perhaps not. I am sticking with those that I already own. Old_Skeet
Crash, it would depend on your investing time horizon. I'm in my late 50's and I plan on sticking with what I have. My EM allocation is 8% of my total portfolio.
All very interesting. Placed small bet on PRELX which is an unhedged EM currency (bond) fund. I'm pretty confident the pendulum will swing back at some not too distant point and these currencies will regain some of their lost value. However, seems to me that EM equities are a much dicier bet. I won't play there. In that case you're dealing not only with the strength of currencies relative to the dollar, but also with a host of other issues - namely the health of the global economy. The U.S. is still the elephant in the room globally. So should our economy and equity markets slump, I wouldn't expect EM equities to do well. Just some rambling thoughts.
An article with convoluted logic and false premises. Best ignored.
Hot money has been coming out of EM for a while now long before Fed started to taper not because of the Fed but because of performance chasing in the US. When EM no longer justifies the risk premium money comes out. EM will stay underperforming until US markets stagnate and money moves there as the next best idea. The connection to Fed is tenuous.
The idea that the Fed would not do a taper because of stock market reaction or gyration is ludicrous. While the Fed does not want to spook the markets unnecessarily and the idea that the Fed is propping up the market is popular, Fed doesn't base its decision on the markets. If the economy is improving enough to increase money flow, Fed will taper regardless of what the markets do. Fed cannot be bothered about the "good news is bad news" mentality of the markets. The idea that they may be concerned about global market reaction is even more ludicrous.
So, there is no moral hazard or any reason to believe Fed action will have any effect on EM. In fact, if anything. I expect the opposite. Continued tapering will remove liquidity chasing performance in US markets at the moment and money will start to look into EM because of the good valuations there and so we may very well see money flowing from US to EM with Fed taper after the initial tantrum to pull money out. No way of predicting which way it will go.
Comments
Regards,
Ted
Hot money has been coming out of EM for a while now long before Fed started to taper not because of the Fed but because of performance chasing in the US. When EM no longer justifies the risk premium money comes out. EM will stay underperforming until US markets stagnate and money moves there as the next best idea. The connection to Fed is tenuous.
The idea that the Fed would not do a taper because of stock market reaction or gyration is ludicrous. While the Fed does not want to spook the markets unnecessarily and the idea that the Fed is propping up the market is popular, Fed doesn't base its decision on the markets. If the economy is improving enough to increase money flow, Fed will taper regardless of what the markets do. Fed cannot be bothered about the "good news is bad news" mentality of the markets. The idea that they may be concerned about global market reaction is even more ludicrous.
So, there is no moral hazard or any reason to believe Fed action will have any effect on EM. In fact, if anything. I expect the opposite. Continued tapering will remove liquidity chasing performance in US markets at the moment and money will start to look into EM because of the good valuations there and so we may very well see money flowing from US to EM with Fed taper after the initial tantrum to pull money out. No way of predicting which way it will go.