Comments (5)

  1. Lionel Sterling says:

    This week’s commentary, particularly the section regarding Asia (the last bullet point) seems to negate your dislike of emerging market stocks (at least those Asian markets mentioned in the writeup. Please explain this discrepancy. Thank you

    1. Lindsay Hall says:

      First, you raise a valid point/criticism. This week, I will be adding a parenthetical comment to our emerging market equity ranking to convey a much more positive view of Asian EMs vs the EM universe overall.

      However, we have had EM equities as a “Dislike” for at least a year and they have lagged the S&P over that timeframe. We were also quite negative on them back in 2011 when they were all the rage.

      Yet, they are currently cheap as are their bond markets. The debt side has been our preferred way to get equity-like returns out EMs with much less risk and far higher cash flow. We have done this primarily with GIM and TEI, two Franklin closed-end funds (the latter being more EM-focused but GIM has material exposure, as well).

      Our primary reason at this point for being leery of EM equities in general is what Louis described: The tendency of EMs to have a heart-attack if the US market has chest pains. Since we are very concerned about another sharp decline in US stocks, we are reluctant to have broad—as opposed to select—EM equity exposure. In that regard, we have had India on our “Like” list for over a year (adding it when that market came down hard in Q1 or Q2 of last year, as I recall).

      We plan to at least move EM equities to neutral in the next global equity sell-off.

      Thanks for your feedback!

  2. Doug Cleland says:

    I really enjoy your analyses and (as may be expected perhaps) am in general agreement personally and in the portfolios I run.
    In that you make a good case for value in Emerging Markets, why is it that they feature in your ‘Dont Like” column?

    1. Lindsay Hall says:

      First, you raise a valid point/criticism. This week, I will be adding a parenthetical comment to our emerging market equity ranking to convey a much more positive view of Asian EMs vs the EM universe overall.

      However, we have had EM equities as a “Dislike” for at least a year and they have lagged the S&P over that timeframe. We were also quite negative on them back in 2011 when they were all the rage.

      Yet, they are currently cheap as are their bond markets. The debt side has been our preferred way to get equity-like returns out EMs with much less risk and far higher cash flow. We have done this primarily with GIM and TEI, two Franklin closed-end funds (the latter being more EM-focused but GIM has material exposure, as well).

      Our primary reason at this point for being leery of EM equities in general is what Louis described: The tendency of EMs to have a heart-attack if the US market has chest pains. Since we are very concerned about another sharp decline in US stocks, we are reluctant to have broad—as opposed to select—EM equity exposure. In that regard, we have had India on our “Like” list for over a year (adding it when that market came down hard in Q1 or Q2 of last year, as I recall).

      We plan to at least move EM equities to neutral in the next global equity sell-off.

      Thanks for your feedback!

  3. Johnk244 says:

    I do trust all of the ideas you’ve presented in your post. They’re very convincing and can certainly work. Nonetheless, the posts are very short for beginners. May just you please lengthen them a bit from next time? Thanks for the post. adbakbdgeeff

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