Tag Archive | Emerging Markets

$1M more in your IRA by avoiding major losses

SmartStops Comment:   Modern Portfolio Theory  - continues to have holes poked in it.  Here’s a post by Hedgeable reiterating the importance of missing the worst times in the market.

From their post:  If you merely miss out on 75% of market losses during the two largest crashes of the past 25 years- the dot-com crash and the financial crisis crash- you will have $1 MILLION MORE IN THE AVERAGE IRA ACCOUNT!!!

Hedgeable_Portfolio_without_75_percent_Losses

BaseBall fans will like the rest of the post too.  Read Entire Post

 

Position Sizing: Key to Maximizing Returns

In a time when market volatility and equity preservation is of utmost importance, determining the correct number of shares to buy, or “position sizing”, is key to maximizing returns and minimizing risk.

The common investor generally doesn’t spend much time thinking about how many shares to buy or how significant of a position to take.  Instead, most investors use a common methodology of trading the same number of shares each time, which usually translates to a specific dollar amount.  Other, more sophisticated investors, opt to allocate a certain percentage of their portfolio value to a specific position. Following this train of thought, a new position in a portfolio of $100,000 would transcribe either a $10,000, or 10%, investment or a usual position of 50 shares.

Although these methods may work for some, using the volatility of a specific portfolio is likely to be the most effective decision tool.  Measuring a portfolio’s overall volatility enables an investor to decide on what percentage of that portfolio he is willing to risk losing on the new position.  This methodology is better explained through the following example. Read More…

Three ETFs To Play Emerging Market Debt

As developing nations continue to draw investor attention, opportunities in developing market debt may present a viable opportunity.

To not much surprise, many have been turning to developing nations mainly due to their aggregate, or combined, size and expected exponential growth compared to the United States in the near future.   In fact, a recent study indicates that 97% of the world’s population, 75% of its economic production and nearly 67% of stock market capitalization is outside of the United States. Read More…

5 ETFs To Watch As China Grows

Despite a series of tightening monetary measures in 2010, China’s economy grew by an astonishing 9.8 percent in the fourth quarter pushing it ahead of Japan as the world’s second largest economy, while fueling concerns that more needs to be done to fight inflation.

According to Aaron Back and Jason Dean at the Wall Street Journal, China’s economy grew at an annual pace of 10.3 percent in 2010, crushing its 9.2 percent growth in the prior year.  Furthermore, China reported a 31 percent increase in exports and a 38 percent increase in imports as the Chinese economy demanded more raw materials, machinery and consumer goods from producers around the world.  Read More…

Three ETFs Potentially Impacted By Floods In Brazil

Brazil is currently suffering from of one its worst ever natural disasters after extensive rainfall and flooding has caused massive mudslides and killed many people, potentially having an impact on production of coffee and sugar in Latin America’s largest economy.

According to BBC News, harsh storms in the nation dumped the equivalent of one month’s rainfall in just a few hours on Wednesday, sending mudslides ragging through towns, destroying homes, roads, and bridges, while taking out power and telephone lines.  Worst of all, municipal offices in the Serrana region, just north of Rio de Janeiro, have reported that death tolls as a result of the mudslides have surpassed the 500 mark and continue to grow.  Read More…

Hungary ETFs Face Uphill Battle

Recently, credit rating agency Fitch downgraded Hungary’s foreign currency credit rating to just above junk status, fueling concerns of the overall health of the nation’s economy and what lies ahead.

Fitch stated that a primary driver behind its downgrade was due to a “material worsening in the underlying medium-term budget position”.  This downgrade came shortly after the Hungarian parliament passed its 2011 budget.  The new budget is expected to run a little leaner than in previous years resulting in an expected cut to the nation’s deficit to 2.9 percent of debt in the next year.  As a result of these belt tightening measures, Fitch further added that it expects Hungary’s overall output to decrease by nearly 4 percent of GDP in the coming year.  Read More…

9 ETFs To Play Currency Debasement

As developing nations continue to implement loose monetary policies, keep interest rates low and boost money supply, a nation’s debt and currency debasement should me of much concern. 

Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years.  Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%.  During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy.  Similar trends have been seen in Europe, in particularly Greece, Spain and Portugal.

Some concerns of this exponential growth in debt include hyperinflation, as a result of printing more currency, a decline in the value of a nation’s currency, better known as currency debasement, and increased costs of borrowing, which make it difficult to chip away at deficits. Read More…

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