{"id":47901,"date":"2014-02-26T21:04:53","date_gmt":"2014-02-27T02:04:53","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=47901"},"modified":"2014-02-26T21:04:53","modified_gmt":"2014-02-27T02:04:53","slug":"emerging-markets-may-have-further-to-fall-but-its-time-to-start-buying","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/02\/26\/emerging-markets-may-have-further-to-fall-but-its-time-to-start-buying\/","title":{"rendered":"Emerging Markets May Have Further to Fall \u2014 but It\u2019s Time to Start Buying"},"content":{"rendered":"

By MoneyMorning.com.au<\/u><\/a><\/p>\n

Investors are currently getting a nasty reminder that \u2018emerging\u2019 and \u2018frontier\u2019 markets<\/strong> have a risky reputation for a reason. <\/p>\n

Nigeria has just suspended its popular, reformist central bank boss. It seems he\u2019s been a little bit too candid about corruption in the country\u2019s all-important oil industry. The move shocked investors, who saw him as a safe pair of hands and a source of credibility for the country.<\/p>\n

Ukraine meanwhile is dangerously close to civil war. Turkey continues to suffer from political upheaval. <\/p>\n

Elsewhere, currencies have slid, politics are being scrutinised more closely, and investors have generally decided they\u2019d rather keep their money at home.<\/p>\n

Of course, when everyone else decides they hate a market, that\u2019s when contrarian investors prick up their ears. <\/p>\n

So is this a buying opportunity?<\/p>\n

There\u2019s no reward for being a contrarian fund manager<\/h2>\n

I\u2019ve never met a fund manager who wasn\u2019t a contrarian. <\/p>\n

Regardless of what their top ten holdings are, they all like to paint themselves as having a touch of the maverick \u2014 not afraid to go against the grain, and make bold calls in the face of opposition and even ridicule from their more timid peers. <\/p>\n

Yet, for an industry stuffed full of radical free-thinkers, they all seem to jump on the same trades with remarkable consistency. Funny that.<\/p>\n

The reality, of course, is that very few managers genuinely want to stand out from the crowd. It\u2019s called \u2018career risk\u2019. Managers who make truly bold calls, and get it wrong, will rapidly lose clients and then their jobs, in that order. <\/p>\n

Even a decent \u2014 or even stellar \u2014 track record doesn\u2019t help much. It doesn\u2019t take a long period of underperformance before you start seeing carping headlines about once-respected managers being behind the times, or overly wedded to a style or viewpoint. <\/p>\n

So there\u2019s really not a lot of benefit to sticking your neck out in the money management business. <\/p>\n

That\u2019s why I like to watch what fund managers as a group are thinking. Very few of them want to stand out from their peers. So when you start to see them all crowding one way or another, it\u2019s often a good indication that you should be thinking about going in the opposite direction. <\/p>\n

Take a look at the latest Merrill Lynch Bank of America fund manager survey. According to this, global fund managers are gloomier about emerging markets<\/a> than they\u2019ve ever been. Meanwhile, a record percentage are bullish on Europe for the year ahead. <\/p>\n

This is classic. Much as I like eurozone stocks, some of the peripheral markets have practically doubled in the last 18 months. But it\u2019s only now that everyone is turning bullish on them. <\/p>\n

Meanwhile, on the emerging-market front, the MSCI Emerging Markets index hasn\u2019t been this cheap compared to developed markets since October 2008. But no one\u2019s interested. <\/p>\n

One of the basic rules of investing<\/a> is \u2018buy low, sell high\u2019. Yet even the professionals seem to have difficulty abiding by this one. <\/p>\n

This is probably the biggest advantage that we have as private investors over the experts. No one but you scrutinises your investment performance. So if you see an investment opportunity<\/a> \u2014 even if you\u2019re a little early in the day \u2014 you can take it, and wait for it to pay off.<\/p>\n

Emerging markets might fall further \u2014 but they\u2019re already cheap<\/h2>\n

This point about timing is relevant. Despite the poor sentiment towards them, I\u2019m not convinced this is the bottom for emerging markets<\/a>. <\/p>\n

I\u2019m basing that on little more than gut feeling \u2014 it doesn\u2019t quite \u2018feel\u2019 as if they\u2019re hated enough, or that the news flow has been quite hyperbolic enough. I haven\u2019t yet read any articles that say, \u2018That\u2019s it \u2014 these things are never going up again\u2019.<\/p>\n

But the point is, you don\u2019t have to get the timing exactly right. As long as the markets are cheap enough, then in the long run, they\u2019re likely to bounce back. Assuming you\u2019re not retiring imminently, you can start drip-feeding money in (if you haven\u2019t already) and be patient.<\/p>\n

John Stepek,
\nContributing Editor, Money Morning<\/p>\n

Ed note: The above article was originally published in MoneyWeek.<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au Investors are currently getting a nasty reminder that \u2018emerging\u2019 and \u2018frontier\u2019 markets have a risky reputation for a reason. Nigeria has just suspended its popular, reformist central bank boss. It seems he\u2019s been a little bit too candid about corruption in the country\u2019s all-important oil industry. The move shocked investors, who saw him … <\/p>\n

Continue reading “Emerging Markets May Have Further to Fall \u2014 but It\u2019s Time to Start Buying”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-47901","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/47901","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=47901"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/47901\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=47901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=47901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=47901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}