Emerging Markets

Posted on 12 May 2011 by Douglas Chadwick

It is said that 80% of the worlds people,area,wealth and growth lie within the emerging countries. If you were a thirty year old making a once off investment to secure your future pension. There are no prizes for guessing where that investment should be placed. Somewhere amongst the emerging market funds. These markets are no longer restricted to just the BRIC economies of Brazil,Russia,India and China. But now include many of the smaller nations in Asia,Latin America and Eastern Europe. They are quickly ridding themselves of the necessity to be trading with the Western Developed countries. In other words they are moving towards economic independence.
 
However looking at the financial markets today one sees quite a different picture. The Emerging market indices are nearer to their 2011 lows. Whilst the developed market indices are nearer to their 2011 highs. The Developed World has not started the enormous task of clearing up its financial crisis and putting its Banks onto a sound financial footing. The Emerging countries by and large did not have a financial mess to sort out and its Banks are fine.
 
So what's going on and when will rationality and logic come into play? I wish I knew the answer to that question. I don't. However what I do know is like the thirty year old I can be sure that at some point it should happen. Its simply a question of when. There will be probably many false starts.  But if you watch the Saltydog numbers. Stay off the snakes and climb the ladders. Be patient and as Jesse Livermore said "Don't follow your instincts and thoughts until the market first confirms them for you." Then there will be money to be made.