Source: Research Affiliates


The chart above comes to us from Research Affiliates. It notes:

Through March 31, 2014, the three-year cumulative return of emerging market stocks as measured by the MSCI Emerging Markets Index is — 8.35%, while that of U.S. stocks as measured by the S&P 500 Index is 50.73%.

That raises a very interesting issue. The long-term trends favor emerging markets but they are nowhere to be found in the equity markets. Those weak numbers may be mean reverting soon. Continues here

Category: Investing

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7 Responses to “Emerging Markets or U.S. Stocks?”

  1. mpetrosian says:


  2. 4whatitsworth says:

    Great points and this is my bet at the moment. I have been averaging in again for a few months now (this market definitely takes a strong stomach). If the US stays steady and Europe comes back this should be a home run. The down side is that there seems to be a very large short term correlation between US liquidity, interest rates, and emerging market prices so if rates go up quicker than expected watch out. Still in the long run this should work out, but as the saying goes in the long run we will all be dead (The life version of regression to the mean).

    Any good ways to play the Soviet Union market?

  3. Stock Soup says:

    I like the economic riots indicator
    EM riots
    = 5
    USA riots
    = 0
    I’ll stick with USA stocks, for now

  4. intlacct says:

    I’m heavily in on this trade.

  5. thatguydrinksbeer says:

    This is why we rebalance.

  6. constantnormal says:

    Given the rise of multinational corporations, isn’t the whole “global diversification” thing a bit overblown?

    By investing in a diversified portfolio of US-based multinationals, you can participate in emerging market economies, while enjoying the superior transparency and information that US equity markets provide.

    Take a look at where companies like GE, Apple, Google, and others get their revenue from — in many cases, half or more comes from outside the US, with most of it coming from economies that are expanding (those we might consider to me “emerging markets”).

    The only flaw that I can see in this argument is that it muddies the differences between national economies and national markets. But “investing” in a stock in a turbulent EM stock market because it is bubbling away, strikes me as being something other than investing.

  7. mpetrosian says: