Emerging Markets

[Lancelot]

Last Friday, May 26, I liquidated 25% of my Vanguard's Emerging Markets VEIEX position. I have no idea where EMs are headed, I just decided to take some money off the table. If VEIEX rallies, I'll take some more profits.

Nords accurately anticipate the EM decline. I wish I would have sold my position sooner...

Now what to do with the proceeds.

Bond funds have been beaten up a bit. Maybe some TIPS...

Lance

 

[Spanky]

How about Ibond or money market?

 

[Nords]

Nords accurately anticipate the EM decline. I wish I would have sold my position sooner...

Thanks, I'd like to take credit but I'm afraid that I can't.

All I predicted was that Tweedy, Browne was due for a pullback, and how. Down 6% off its high in less than a month, and it's still 10% of our retirement portfolio. Yikes.

PID hasn't exactly been a house on fire, either, but that's why the dividends are being reinvested...

 

[Lancelot]

How about Ibond or money market?

With rates rising, a MM might not be a bad place to park the funds for awhile. If the fixed portion of I Bonds rises (closer to 2%) I'd probably lock some of those in as well.

 

[Lancelot]

Thanks, I'd like to take credit but I'm afraid that I can't. 

All I predicted was that Tweedy, Browne was due for a pullback, and how.  Down 6% off its high in less than a month, and it's still 10% of our retirement portfolio.  Yikes.

Looks to me like your predicition was timely

I mostly been a "buy and hold" investor, but I am begining to appreciate :harvesting" some profits now and then.

 

[mathjak107]

toooo funny,i have been buying eem emerging markets the last few days..hoping it drops around 91 today so i can finish buying my position...... another mans junk is another mans treasure ha ha ha

 

[brewer12345]

Lancelot, how about TIPS? Real rates are the most attractive they have been in a few years. Alternatively, maybe non-US bonds, unless you already have some.

 

[justin]

I've been DCA'ing into EM since March. So far I'm down about 6%. I am glad that there has been a substantial correction because now I can buy more shares! It wouldn't surprise me if EM took another big dip in the next few months. What matters most to me is where it's at in a decade or two. My asset allocation plan still has 12.5% of equities in EM.

 

[MJ]

Lance,

I you want to park some money for 3 years at PFCU their rate until 5/31 (today) is 6% APY.

 

[pinkmali]

I've been wanting to change part of my Roth IRA (10k) to Em Mkts (vanguard) but have been apprehensive b/c of the run up. Do you think now is the right time?
Robin

 

[Lancelot]

toooo funny,i have been buying eem emerging markets the last few days..hoping it drops around 91 today so i can finish buying my position...... another mans junk is another mans treasure   ha ha ha 

mathjak, I opened my EM position on Jan 2004, so I decided to take some profits now.

Lancelot, how about TIPS? Real rates are the most attractive they have been in a few years. Alternatively, maybe non-US bonds, unless you already have some.

Brewer, yep, I will probably buy some 5 year TIPS at the next Treasury Auction.

I've been wanting to change part of my Roth IRA (10k) to Em Mkts (vanguard) but have been apprehensive b/c of the run up. Do you think now is the right time?
Robin

Robin, My Ems are in my Vanguard IRA as well. I am selling part of my position to lock in some profits. As to when to buy, I really have no idea-do the opposite of what I do and you'll make money

Lance

 

[d]

"... 'emerging markets look 'very fully priced to the point of being expensive' ... If you're underexposed to emerging markets, 'now is not the time' to wade in"
market watch article (6/1):

http://tinyurl.com/rz2eh


EDIT: Shortened URL

 

[Nords]

"... 'emerging markets look 'very fully priced to the point of being expensive' ... If you're underexposed to emerging markets, 'now is not the time' to wade in"

I suspect we'll have several more opportunities between now & October...

 

[justin]

"... 'emerging markets look 'very fully priced to the point of being expensive' ... If you're underexposed to emerging markets, 'now is not the time' to wade in"
market watch article (6/1):

Of course they were probably talking about how hot emerging markets were around May 1st!

Where were they when emerging markets were 17% more expensive on May 8 compared to today? Why didn't they warn me that they were at least 17% overvalued then?

 

[d]

well, they're always better when forecasting the past than the future ... but the run-up in EM was pretty obvious early on ... i don't have a lot of EM, but began trimming in january. (of course at this point i wished i had trimmed a bit more.)

 

[justin]

Does anyone know the P/E ratio of the VWO/VEIEX fund from VG? They used to show it on the VG website but it mysteriously disappeared a few months ago (for all their international funds).

How about the earnings growth rate for the countries in the VWO/VEIEX funds? I heard China/India were turning in GDP growth close to 10% per year recently.

The run-up in price seems to be due to great growth in earnings, weakening of the dollar, people ignoring the risk of EM (political, capital markets, etc).

My long term view is that it'll be easier for countries with per capita GDP's of $3000-$10000 to double their GDP's than it will be for the US or other fully developed countries to double theirs.

 

[d]

given the many risks in EM i doubt the p/e ratios have any meaning at all (both p and e are rather unreliable and certainly volatile) ... the run up (and down) in EM is in no small part due to the disparity of size ... a modest increase/decrease of buying interest from developed economies can swamp the small markets.

would agree that gdp growth in some EMs will exceed developed economies, but 1) which ones? and 2) that does not necessarily translate to good equity performance?

no matter how you cut it, EMs are very risky (and no matter how risky you or i think they are, they are probably riskier still!)