Any thoughts on Emerging Markets?

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Postby squash500 » 07 Sep 2008 19:23

No wonder CBQ is doing so poorly :!: Down 28.10% yield to date.

http://finance.google.ca/finance?client=ob&q=TSE:CBQ


What a difference a year makes :) . Last year I believe it was the number 1 fund or etf in canada with a ytd of over 70% :shock: .
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Postby Arby » 07 Sep 2008 19:57

squash500 wrote:What a difference a year makes :) .


That's not a surprise if you've watched the market for a number of years. The Callan Periodic Table of Investment Returns has shown that the one asset class will not lead the market for more than couple of years. That's the main reason to have a diversified portfolio, and not to chase last year's hot sector.
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Postby chiaroscuro » 07 Sep 2008 20:48

Long term it's the place to be, short term you could get your head handed to you on a plate.
"Common sense is the collection of prejudices acquired by age eighteen." ~~AE
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More drop ...

Postby jay » 11 Sep 2008 10:29

At current price of 35.50, Emerging Markets ETF VWO is now down ~40% from its 52 week high of 58.8.

This is getting interesting.
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Postby $seeker » 11 Sep 2008 16:38

jay:

Thanks for the update on VWO.
I wish to complete my position in this fund and had also noted the decline.
This does look like a good entry but I don't know what level of correction in the past this correction compares . To return to previous hi this needs to increase about 67%
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Postby $seeker » 11 Sep 2008 17:55

As a follow up to above post I had a look at 3 older emerging market funds. Data from TDWDB

Templeton Emerging Markets around for about 17 years had a worst 1 year period of negative 44%

AGF Emerging Markets around for about 13 years and had a worst 1 year period of negative 51%

CI Emerging Markets around for about 16 years and had a worst 1 year period of negative 29%

I have not compared how these funds define emerging markets and I am unsure if these are negative numbers for a calender year or just any 12 month period. Just an opinion and BTW my initial position is down 20% as I entered here thinking that was a significant correction so what do I know!!!
In any event, this current negative 40% correction would be in the significant category based on this minor peek at some data
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MSCI Emerging Market Index Data

Postby jay » 11 Sep 2008 19:35

seeker, data from http://www.mscibarra.com/products/indic ... mance.html
shows:

Date Amount Return
-------------------------------------------
Dec 31, 1987 100.000
Dec 30, 1988 134.871 34.87%
Dec 29, 1989 214.699 59.19%
Dec 31, 1990 185.162 -13.76%
Dec 31, 1991 288.796 55.97%
Dec 31, 1992 314.929 9.05%
Dec 31, 1993 539.344 71.26%
Dec 30, 1994 492.578 -8.67%
Dec 29, 1995 458.369 -6.94%
Dec 31, 1996 476.315 3.92%
Dec 31, 1997 412.465 -13.40%
Dec 31, 1998 298.973 -27.52%
Dec 31, 1999 489.420 63.70%
Dec 29, 2000 333.793 -31.80%
Dec 31, 2001 317.400 -4.91%
Dec 31, 2002 292.090 -7.97%
Dec 31, 2003 442.778 51.59%
Dec 31, 2004 542.174 22.45%
Dec 30, 2005 706.483 30.31%
Dec 29, 2006 912.648 29.18%
Dec 31, 2007 1,245.594 36.48%

hard to compare because we never had a 5 year run like the last 5 years.
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Postby $seeker » 11 Sep 2008 20:06

jay:

Thanks for the data. Looking back I think I sold out of an Emerging Markets fund while with a full service broker in 1998 as he did't like the focused approach, prefering a Global Fund instead. I don't want to think about the missed opportunity!!
I think I will wait for Dec. 31 numbers to be posted as in your list. There may be some tax loss selling as the end of the year approaches and a better opportunity may appear to add to position. As AltaRed mentioned, 50% down could be nice. If I had not taken a partial position already I might nibble here. I know this is timing and is not likely the best strategy, but once position is complete it will be long term hold.

another interesting site
http://www.ifa.com/portfolios/PortRetur ... orw=1#calc
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Postby cashew » 22 Sep 2008 05:35

chiaroscuro wrote:Long term it's the place to be, short term you could get your head handed to you on a plate.


I'm hoping so. I recently set up my RPP so my employers contribution all goes to Mackenzie Emerging Markets. My own contribution gets divvied between Beutel Goodman Balanced and Great West Life Real Estate
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This is crazy ...

Postby jay » 08 Oct 2008 12:28

EEM and VWO down 50% YTD. And down 55% from their peaks of Oct 31 2007.

As of Jan 2008, the 5 year return of emerging markets was almost 350%. That is an average return of 70% per year. As of today, it is 60% :), i.e. an average return of 12% per year. These numbers are in USD.

OK now this is a major drop. Anyone dipped their toes yet? My hands are itching to click on the buy button. I keep adjusting my buy limit orders.

Someone spoke of a Nasdaq like crash ... starting to make sense.
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Postby $seeker » 08 Oct 2008 18:29

See here for some opinions:
http://www.bogleheads.org/forum/viewtop ... 3&start=50
I did add some to my initial position at 50% correction!!
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Postby cycle » 08 Oct 2008 20:49

I haven't seen enough carnage to become interested. Emerging market companies' market valuations are going down, sure, but I haven't heard of major failures yet. I want to see some creative destruction at work to find out which companies are viable and which are not, and only after that will I pick through the rubble. This is the main parallel I see with the dot-com crash: the few good Internet companies emerged only afterwards.

And if emerging markets try a slow, continuous bailout of the whole system like Japan did, they won't get a dollar of mine for a long, long time.
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Postby squash500 » 08 Oct 2008 21:05

I'm getting killed on the xin :shock: . Down around 35% ytd.

Is xin even considered an emerging market etf? I know it's composed of the msci eafe index.
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Postby adrian2 » 08 Oct 2008 21:51

squash500 wrote:I'm getting killed on the xin :shock: . Down around 35% ytd.

Forgive me, Father, as I have xinned. :wink:

squash500 wrote:Is xin even considered an emerging market etf? I know it's composed of the msci eafe index.

Definitely not emerging market.
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Postby squash500 » 08 Oct 2008 22:08

adrian wrote: Forgive me, Father, as I have xinned


I like that pun :wink: .
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Postby cashew » 08 Oct 2008 22:41

cashew wrote:
chiaroscuro wrote:Long term it's the place to be, short term you could get your head handed to you on a plate.


I'm hoping so. I recently set up my RPP so my employers contribution all goes to Mackenzie Emerging Markets. My own contribution gets divvied between Beutel Goodman Balanced and Great West Life Real Estate

I had some money market cash from selling some Mackenzie Natural Resources a few months ago.

I had an urge to buy this week so I split it 50/50 between Beutal and Mackenzie EM
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Back to the lows of Oct 10

Postby jay » 22 Oct 2008 11:22

Using VWO as a proxy, Emerging markets today touched the Oct 10 low. Off ~62% from their peak almost a year ago.

Anyone yet interested?
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Re: Back to the lows of Oct 10

Postby Taggart » 22 Oct 2008 16:38

jay wrote:Using VWO as a proxy, Emerging markets today touched the Oct 10 low. Off ~62% from their peak almost a year ago.

Anyone yet interested?


I hold mostly DEM with a bit of TD Emerging Markets for the 10% allocation in the RRSP's. In this market so far, DEM seems to be doing a bit better than VWO. You pay more for DEM though.

So far, most of the excess money coming in monthly from interest and dividends has been thrown at the less riskier EAFE.
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Postby carnet » 22 Oct 2008 17:03

yes, rebalanced a little with vwo this week....at the rate things are going i may have to do it again soon
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Postby Taggart » 31 Aug 2009 12:26

Financial Times (UK)

China’s GDP is investors’ MSG

By Matthew Vincent

Published: August 28 2009

"Paul Marson, the former Bank of England economist and chief investment officer for Goldman Sachs Wealth Management, has just completed some research on emerging markets for his new employer, Lombard Odier. He studied stock market performance and real GDP in emerging markets between 1976 and 2005, and found absolutely no correlation between economic growth and equity total returns."
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Postby Taggart » 18 Nov 2009 07:09

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Re: Any thoughts on Emerging Markets?

Postby Taggart » 05 Dec 2010 21:14

Still seems to be a tug of war for the professors on one side who say there is no link between GDP growth and equity returns, while the other side, mainly investment professionals, say the opposite.

Experts pour scorn on claims about link between GDP growth and returns

-----------------------------------------

A good example of a country with high GDP returns is of course China. Looking at the chart for the Shanghai Composite Index, it's certainly nowhere near it's high, nor close to it's low for the last ten plus years. I've been noticing a lot of ADR's from China that are looking good value in the stock screener, but whether I would want to buy any, that's a different story.
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Re: Any thoughts on Emerging Markets?

Postby MaxFax » 06 Dec 2010 12:25

Of course there is no link. Stock returns depend on valuations. Valuations are always too optimistic about future growth - especially at GDP peaks. I cannot believe the amount of ink on this correlation. Any conclusions are muddied by the twin issues - correlation with company earnings, and correlation with stock valuations (leading to investing profits). Even the correlation with earnings is a logical stretch. List of reasons why WON'T BE THE SAME.

Added later....
You should also beware of the 'experts' quoting historical proofs. One error I see is their proviso that returns were measured after-inflation. The inflation of the foreign country is of relevance only to the investors in that country. Inflation may, OR MAY NOT, cause their currency value to slide impacting the FX gains/losses. E.g. India currently has high inflation now, but that does not impact a Canadian investor unless their currency falls, which it isn't.
Last edited by MaxFax on 06 Dec 2010 12:39, edited 1 time in total.
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Re: Any thoughts on Emerging Markets?

Postby mac1214 » 06 Dec 2010 12:32

Most emerging market stock indexes are nothing more than covers for crooks and thieves to operate. Russia, China and India are set up so that Western currency (and suckers) can bring their money in, but not take it out, without a 30% or so loss. They don't care or know how to run an honest market. It's for dreamers who think that they're investing in good faith and want to believe that the countries they're investing in are also that way. Canadian investors should keep their money close at hand.
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Re: Any thoughts on Emerging Markets?

Postby newguy » 06 Dec 2010 12:57

You should read the latest wiki leak about the GDP lie that is China. Now how do you figure correlations?

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