Stocks & Equities

The Cure for Baldness

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Posted by Neel Kashkari Pimco

on Tuesday, 25 September 2012 08:15


American society is becoming increasingly politically polarized. Indeed, a June Pew Research Center survey found that while philosophical divisions between groups based on race, education, income, religion and gender have remained largely flat since 1987, the division based on political differences has almost doubled during that same time and has ramped dramatically since 2009.

EquityFocus BaldnesSept2012 Fig1

This trend is happening at the same time that people increasingly turn to online sources for their news. In particular, as Figure 2 indicates, non-traditional media outlets are gaining share at the expense of mainstream media, especially print newspapers. Barriers to entry for individuals creating and publishing content online are low – in effect democratizing content creation. This opens societies to a more diverse and free-ranging marketplace of ideas and opinions.

EquityFocus BaldnesSept2012 Fig2

But it also creates challenges for individual publishers: Getting noticed among the thousands of others competing for mindshare is becoming harder. This is complicated further by the use of text messages and social media services such as Twitter to disseminate information, which limit the articulation of viewpoints to very brief messages. It is difficult to distill complex ideas into a 140-character tweet.

What should an author, eager to gain attention, do in an increasingly crowded, noisy and contentious world of opinions where the most popular delivery mechanisms constrain the ability to fully articulate an idea? Simple: offer an increasingly extreme view – with a hyperbolic headline. Make as big a splash as possible by exploiting society’s increasingly insatiable demand for byte-sized information. As a result, balanced, centrist views are rarely offered and often drowned out by the shrillest voices. Traditional news organizations have recognized and are responding to this trend as well, so that they are not themselves lost in this crowded cacophony. Indeed, there is an amplifying feedback loop between our increasingly polarized society and the media.
Just one look at the news aggregator website Realclearpolitics.com illustrates this trend. After a Presidential candidate gives a major speech, one will inevitably find opinion editorials lumped into one of two categories: “Why the candidate was brilliant” or “Why the candidate was terrible.” Important and complex concepts are reduced to punchy (and often trite) headlines. Nuance and well-reasoned analysis are lost. Pundits, even Nobel Prize winners, can be counted on to parrot political talking points. Somehow they don’t seem to be embarrassed for reliably playing the part of mindless partisan drone. They are getting noticed – and perhaps that is all that matters to them.
Unfortunately, this lurch to extremes isn’t confined to the political arena. Clicking on sister website Realclearmarkets.com often reveals a similar dynamic. Rarely does one find market commentators offering moderate, balanced investment advice. More likely one will find extreme headlines designed to capture maximum attention: Stocks are dead. Bonds are dead. Gold is dead. Buy and hold is dead. Oil is dead. We are all dead.
In his August Investment Outlook, titled “Cult Figures,” Bill Gross explained why we at PIMCO believe that returns across asset classes will be lower in the future than they have been in the past. Some media outlets reported that Bill declared that stocks are dead, when in fact he said stocks will likely outperform bonds over the long term, but in a New Normal environment, returns across asset classes (including bonds!) will be lower than the returns to which we’ve been accustomed. “Stocks are dead” makes for a much more exciting headline than “stock and bond returns will be more moderate in the future.” And in our 140-character world, this became the sound byte of Bill’s well-reasoned and empirically substantiated argument.
It would be convenient if we could simply declare one asset class or one investment strategy as the solution to all investors’ objectives, but, as I’ve discussed in prior commentaries, with a future that still could be deflationary, moderately inflationary or even highly inflationary, no one asset class or investment strategy will do well in all scenarios or is appropriate for all investors. Investors need to create portfolios designed to withstand the probabilities of those various outcomes. While hyperbolic headlines may draw the most “clicks,” “likes” and “retweets” – it usually makes for poor investment advice, and if investors don’t have the time to study the nuances underlying sophisticated investment strategies, they may be taking risks they don’t understand. Fortunately, most responsible investors know that describing the optimal portfolio to balance various global economic scenarios takes more than 140 characters.
At the risk of exceeding my allocation of mindshare (and, if you have read this far, thank you) – let’s take a look at the three sources of stock market returns to consider what the future may hold.
  1. Earnings may grow
  2. Valuations may increase
  3. Companies may pay dividends

Considering each of these individually:

1. Earnings growth – more specifically earnings per share growth. If earnings don’t grow, but just stay flat, then this term of the equity return equation would be zero. Where do corporate earnings come from? They come from economic activity. Earnings growth for the market as a whole ultimately comes from economic growth. If an economy stops growing, corporate earnings also might not grow, but they could still be positive.

Some market commentators have remarked that there is no correlation between stock returns and GDP growth, and they therefore conclude that they are unrelated. Figure 3 illustrates the low apparent correlation between global equity returns and GDP growth.


EquityFocus BaldnesSept2012 Fig3

Remember, however, that our professors in statistics classes usually went out of their way to teach us that “correlation does not equal causation.” In other words: Just because two things look related does not mean one necessarily caused the other. Similarly, a lack of apparent correlation does not necessarily mean a lack of causation. Many other factors could also be at play that cause direct correlations to appear to break down.

So how do corporate profits relate to the growth of an economy? The income approach to measuring economic activity helps demonstrate the important linkage between economic activity and corporate profits (note: I use National Income here rather than GDP because it more directly illustrates the fundamental linkage between corporate profits and economic activity):
National Income = Labor Income + Corporate Profits + Rental Income + Interest Income
Obviously in a global economy this relationship is more complex. For example, large U.S. multinationals have been growing their earnings faster than the U.S. economy by selling products and services globally and tapping into higher growth markets. And indeed some industries are countercyclical. But the basic relationship between economic activity and corporate profits has to be correct. There is a linkage even if not strongly correlated in the short term.
The denominator of earnings-per-share (EPS), or share count, complicates the issue. Share issuances hurt EPS growth by diluting earnings. Conversely, share buybacks help. Some commentators have noted that increased share issuance has been a key driver that has broken down the correlation between economic growth and equity returns. Unfortunately those breakdowns usually mean equity returns have been lower than economic growth would have suggested because firms have issued shares more quickly, diluting existing stockholders. Exports and share issuance and buybacks may complicate the direct relationship between economic activity and corporate profits, but the fundamental linkage between the two is irrefutable.
Note that corporate profits have increased over the past several decades in part because corporate taxes as a share of GDP have fallen over time and the share of National Income that has accrued to labor has also fallen. Going back to the equation that defines National Income: If National Income grows modestly and Labor Income grows even more slowly, it is likely that Corporate Income will grow more quickly to balance the equation. We believe that there will be an easing of these tailwinds that have helped drive corporate profit growth so quickly over the past few decades. There are limits to how low corporate taxes and labor’s share of National Income can go. If we are right, that suggests future equity returns, driven by corporate profit growth, are unlikely to be as strong as in the past.
EquityFocus BaldnesSept2012 Fig4
EquityFocus BaldnesSept2012 Fig5


2. Valuations – P/E multiples can expand. As fear decreases and confidence increases investors are often willing to pay more for the same dollar of earnings. Hence even if earnings are flat stocks still have the potential to generate positive returns by people paying more for the same earnings. There are many measurements of earnings – last twelve months, forward twelve months, cyclically adjusted. Each has advantages and disadvantages. Overall valuations of stocks seem reasonable at today’s level in a historical context with a developed market P/E of 14 times and emerging markets at 12 times (measured by the S&P 500 and the MSCI Emerging Market index, respectively). We aren’t forecasting strong P/E expansion from here, though if left tail risks are reduced, it is certainly possible.

3. Dividends. Even if an economy were to stop growing, corporate profits were to stop growing and P/Es were to remain flat, stocks still have the potential to generate a positive return by paying dividends. Hence economic growth is not a hard ceiling on stock returns, but again the overall linkage between economic activity and corporate profits and dividends is clear. Economies that grow more quickly fuel corporate earnings that can then grow more quickly. Corporations that experience sustained growth and strong cash generation are more likely to pay and increase their dividends. In past decades when economic growth has been slower, dividends have been a larger share of equity returns than capital appreciation. Figure 6 shows equity returns by decade, broken out by capital appreciation and dividends. One can see in the slow growth 1970s dividends were a larger share of total equity returns. Given our New Normal outlook of continued sluggish economic growth, we believe investors should focus on companies with a strong ability to pay and grow their dividends.

EquityFocus BaldnesSept2012 Fig6

If the stock market as a whole has historically generated 6.6% real returns annually (per Jeremy Siegel’s “Stocks for the Long Run”) and we believe it is going to generate more modest returns going forward, in the 3%–4% range, what can equity investors do now?
  1. Active management becomes increasingly important. If we believed the equity market would provide very strong growth, then we’d believe the cheapest passive exposure to stocks would likely be enough. Unfortunately we don’t think that’s the case, so alpha generation or selecting stocks that can outperform the market as a whole, is essential to meeting overall return objectives.
  2. Look to companies that can grow faster than the market as a whole. Where a company is headquartered is not nearly as important as where it does business. The best way for a company to overcome the constraints of a slow domestic economy is to sell into higher growth economies. Sometimes companies headquartered in higher growth economies are best positioned to capitalize on them. Sometimes large multinationals are better equipped to take advantage of those growing markets. We believe investors should consider an unconstrained approach that allows investors to concentrate in the best companies, wherever they may be domiciled. In addition, some companies are able to out-compete entrenched players and take market share.
  3. Don’t overpay for companies. Look to well-run companies that sell into higher growth markets, but of course it doesn’t make sense to pay too high a price for them. We believe focusing on quality is a smart investment strategy, especially in a low growth environment with ever-present macro risks. But we believe a prudent investment approach should be anchored in a rigorous valuation framework. Sometimes buying a somewhat lower quality company at a steep discount makes more sense than overpaying for the highest quality company. 
  4. Actively manage downside risk. This is a constant refrain of my colleagues and me at PIMCO. In the next six months there are several major policy drivers that each individually could overwhelm market fundamentals: the ECB’s actions to stabilize the eurozone, the U.S. Presidential election and the U.S. Fiscal Cliff. While we believe policymakers are well-intentioned and our base case scenario avoids left tails in the near future, political factors could constrain policymakers. We believe hedging against extreme downside risks is prudent, even if it means giving up a little on the upside.

So, as you can see, the story of stocks is more nuanced than one tweet, one headline or even one discussion. It is a story of assessing risks and balancing potential outcomes – one that presents real opportunities for investors even in a lower return environment utilizing a process grounded in both solid, bottom-up analysis and top-down, macro insights. 

And yet the same hyperbolic polarization that we are seeing in our politics continues to extend to other subjects important to our lives. You may be wondering what the title of this piece, “The Cure for Baldness” has to do with equity investing. I must confess: nothing at all. I wanted a headline that would capture attention, and I know I have a lot of company among the fellow follically challenged in the investment industry.

Hyperbolic polarization during a Presidential election cycle shouldn’t be unexpected, and since we each only get one vote, for one candidate or the other, it really is all or nothing. Fortunately investing isn’t all or nothing. We can allocate to individual companies that we believe are positioned to grow faster than the market and those that we believe will be more resilient against market shocks. Given how hard people work over many years to save for their future and for their families, we believe it is worthwhile to take time to craft an investment strategy that can withstand a range of market outcomes. Reports of the death of smart investing have been greatly exaggerated (and the cure for baldness is right around the corner).


Past performance is not a guarantee or a reliable indicator of future results. All investmentscontain risk and may lose value. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their financial advisor prior to making an investment decision.

The correlation of various indices or securities against one another or against inflation is based upon data over a certain time period.  These correlations may vary substantially in the future or over different time periods that can result in greater volatility.

This material contains the opinions of the author but not necessarily PIMCO and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. ©2012, PIMCO.


Stocks & Equities

The Bottom Line

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Posted by Don Valiloux - Timing the Market

on Monday, 24 September 2012 07:45

Downside risk in North American equity markets exceeds upside potential in equity markets during the next 2-3 weeks prior to start of the third quarter earnings report season. Thereafter, prospects turn positive. Selected positive seasonal trades such as gold and energy have performed well, but are approaching their end of their period of seasonal strength. Similarly, selected negative seasonal trades such as Transportation and Semiconductors are approaching the end of their seasonal weakness. The time to take profits in these seasonal trades is rapidly approaching. Short term technical indicators will be useful for determining exit points. A new series of seasonal trades will appear as the end of October approaches.

The weakest period in the year for North American equity markets from September 16th to October 9th is happening again this year. This is the time of year when companies most frequently lower guidance prior to release of third quarter results (i.e. earnings confession season). Lots of examples last week including FedEx, Norfolk Southern and Bed Bath & Beyond! Possibilities of more frequent guidance declines this year are higher than usual. Third quarter year-over-year consensus for Dow Jones Industrial Average companies already calls for a 1.6% decline. Consensus for S&P 500 companies is a decline of 2.7% (down from 2.1% a week ago) despite a 20.2% gain by Apple Computer. Since release of second quarter reports, 80% of S&P 500 companies that changed guidance lowered their guidance. Consensus for TSX 60 companies is an average decline of 7.8%. Despite consensus estimates calling for lower earnings on a year-over-year basis, consensus estimates appear too high and likely will continue to fall prior to release of third quarter results.

Macro events outside of North America also will influence equity markets. A decision by Spain to ask the European Central Bank to purchase Spanish sovereign debt is scheduled on Thursday. The Eurozone consumer confidence index is released on Thursday.

U.S. economic news this week is expected to be mixed. Case-Shiller and Consumer Confidence on Tuesday are potential positive events. Weekly initial jobless claimes, Durable Goods Orders on Thursday and Chicago PMI and Michigan Sentiment on Friday are potential negative events.

Earnings reports this week are not expected to be significant. Focus is on Nike on Thursday.

Historically, North American equity markets have moved lower from mid- September to mid-October during a U.S. Presidential election year (particularly when the polls show a close election as is indicated this year. Thereafter, equity markets have moved higher until at least the beginning of January (The exception was the year 2000 when confirmation of President Bush as President was delayed until January 2001).

Cash on the sidelines is substantial and growing. However, political uncertainties (including the fiscal cliff) preclude major commitments by investors and corporations before the Presidential election.

Equity Trends

The S&P 500 Index slipped 5.62 points (0.38%) last week. Intermediate trend is up. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought and showing early signs of rolling over (e.g. a fall by RSI below its 70% level on Friday).

clip image003 thumb8

The TSX Composite Index fell 115.87 points (0.93%) last week. Intermediate trend is up. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought and showing early signs of rolling over (e.g. RSI falling below the 70% level). Strength relative to the S&P 500 Index remains neutral.

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Ed Note: to view another 44 charts on Equities, Currencies and Commodities go HERE




Stocks & Equities

This 30-Second Quiz Will Drastically Improve Your Investment Results

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Posted by Dr. David Eifrig, editor, Retirement Trader

on Saturday, 22 September 2012 08:16

For more than a decade, I've used a simple quiz to guide my investments.

This quiz has helped my Retirement Trader readers close 61 consecutive trades with a profit. And it's allowed myRetirement Millionaire readers to safely make more than 20% per year in regular stocks.

This quiz takes less than 30 seconds to complete. And if you start using it, you could drastically improve your investing results.

All you have to do to take the quiz is ask, "Does the company I'm investing in enjoy tremendous customer loyalty?

If the answer is no, chances are good that you should pass on the stock.

But if the answer is yes, chances are good that you've found a safe, long-term stock investment… one you can hold for years and compound wealth at 10%-15% per year.

Take Coca-Cola for example. Coke enjoys customer loyalty because its products taste good. They are consistent. They are everywhere. And for less than a dollar, a customer can enjoy a brief bit of pleasure. Since 1995, Coke's shareholders are up 250%, including dividends. 

Other great consumer brands like Hershey (chocolate) and McDonald's (fast food) enjoy this loyalty as well.

These are familiar examples of "retail" loyalty. But there's another little-known type of loyalty… This form of loyalty comes down to "switching costs" for larger companies.

You see, when a company is considering moving its business from one service provider to another, it must consider the costs. 

Take Microsoft, for example. If your 500-employee office is used to using Windows and Office software, it's going to be difficult for your company to ever switch to new software. 

If your company is going to switch 401(k) providers or payroll managers, there's going to be a big cost. If it's going to switch the phone system it uses on thousands of phones, there's a big cost. A company might think another service provider would be better, but it won't ever switch from its current provider because the "switching costs" are too high. 

This means constant sales and insulation from competition for Microsoft, communication equipment provider Cisco, and tech giant IBM. Since 1995, IBM investors have seen a total return of more than 1,100%. 

No matter what form it comes in, loyalty ensures a constant and unrelenting demand for products… which keeps profit margins high and sales growth strong. It also helps insulate a company from competition… which is a crucial attribute for a long-term investment. 

Remember… in the "survival of the fittest" world of capitalism, a business must get every possible bit of insulation from upstart competitors. Otherwise, it will eventually fail and leave its shareholders empty-handed.

By now, most DailyWealth readers know that owning great dividend-paying businesses is the key to long-term stock market success. These companies get you on the road to compounding.

These businesses are almost always identified by their extreme customer loyalty. And this loyalty ensures big profit margins, steady sales growth, and extreme resistance to competition. Plus, they allow you to sleep well at night. These are the sorts of companies I look for in my advisories.

And all it takes to recognize them is a 30-second quiz.

Here's to our health, wealth, and a great retirement,

Dr. David "Doc" Eifrig


Retirement Trader is written by Dr. David Eifrig Jr., MD, MBA. David worked for major Wall Street banks (including Goldman Sachs) before retiring, going to medical school, and becoming an ophthalmologist. Now, in his latest "retirement," David is sharing the trading and investing secrets he learned while working for the Street. 

With over 32 years of investing experience "Doc" (as we call him around here) Eifrig will show you how to apply simple and safe investment strategies, used by many of the elite trading desks on Wall Street.

Twice a month, Doc will show you step-by-step how to extract more money from the markets than you knew possible. From insight into the market's safest investments in high yielding stocks, to selling options on below book value businesses, to uncovering cheaply priced warrants and convertible bonds, Retirement Trader covers a wide range of investment strategies, all designed to improve your retirement and your portfolio.

Subscribe Now | Click here to learn more.



Stocks & Equities

Six predictions for the Canadian economy

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Posted by Kevin Press - BrighterLife.ca

on Friday, 21 September 2012 10:11


Consumers are paying down debt rather than spending, businesses leaders remain nervous and governments across Canada are unlikely to invest in further economic stimulus unless something major threatens our recovery. TD Economics’ latest quarterly outlook for the Canadian economy is a mixed bag at best. Next year will be better, we mean it this time.

The report makes a number of predictions about Canada and global factors that could impact our economy:

  1. The economy will grow, but not dramatically. Real gross domestic product (GDP) growth will be 1% this quarter, 1.8% in Q4 and plus-2% throughout 2013. Diana Petramala, an economist with the bank, told me that what’s holding us back has less to do with the 2008 financial crisis than it does with other, more systemic factors. “The first is poor productivity performance,” she said. “The second is our aging population. The labour force isn’t growing as fast as it has in the past … We’re pretty much growing right at our potential growth rate.”
  2. Federal and provincial governments will spend less, and may even raise taxes. Despite Prime Minister Stephen Harper’s comments last week, we shouldn’t count on further government stimulus. This will have a negative effect on economic growth. Petramala told me that if the domestic economy went into a sustained downturn, then of course this wouldn’t be the case. “But we think that the economic environment will start to improve in 2013 and government will have the capacity to remain on-track and get their budgets balanced,” she said.
  3. Consumer spending will be relatively soft. Relative to income levels though, consumer and household debt will remain high. “Incomes aren’t growing as fast as they have in the past,” said Petramala. Still, a lot of consumers have gotten the message about debt. “In the last quarter, we saw the savings rate rise from 3.1% to 3.6%. So it’s not that they can’t go out and spend, it’s that they’re choosing to focus more on restraint.”
  4. The Canadian housing market is 10% over-valued on average, and prices will come down accordingly. We’re not looking at a crash. Prices are expected to come down over a two- to three-year period. Vancouver and Toronto are over-valued by something more like 15%.
  5. Business spending, particularly among exporters, will start to pick up next year. There’s still uncertainty in Europe, the U.S. and in emerging markets. This all contributes to the Canadian economy’s weakness in the short term. But next year and the year after will see a 7% to 10% boost in business spending according to TD Economics.
  6. The Bank of Canada’s overnight interest rate isn’t moving until the second half of 2013. Expect a 50-basis point increase next year, followed by the same again in 2014. From there, look for gradual steps to “bring the overnight rate back to a more normal level,” Petramala told me. One of the effects of the latest round of quantitative easing in the U.S. is that “the Bank of Canada won’t be able to go as quickly as maybe it would like.”

A couple of other interesting calls: the U.S. recovery will strengthen next year; we’ll see more positive growth in the eurozone and emerging markets; and crude oil will hit US$102 per barrel.

Keep up to date on what’s happening in the capital markets and the real economy. Subscribe to receive Today’s economy blog automatically by RSS or email.


Stocks & Equities

Why All Emerging Markets Are Not Created Equal ... and Where Investors Are Heading

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Posted by Mike Burnick - Money & Markets

on Thursday, 20 September 2012 07:21

The latest monetary easing by the European Central Bank (ECB) and Federal Reserve has given financial markets on both sides of the Atlantic a positive lift. But the global cheer did not extend to China as stocks in Shanghai continue to slide.

In fact, many emerging stock markets have been under-performing, as I pointed out in a previous Money and Markets column. And the trend hasn't improved much for some, including China, in spite of a pickup in global capital flows into the region.

But all emerging markets are not created equal. While some are high-profile laggards, others are beginning to outperform.

This highlights the fact that not all emerging markets are moving up or down together these days. It also underscores the importance of doing your homework to uncover the hidden opportunities in emerging markets.

[Editor's note: To help you uncover these opportunities, Mike has a FREE special report where he gives you his five tried-and-true rules for global ETF trading. Click here to read it now.]

China: No Sign of a Bottom Yet

China, the emerging market poster-child, has continued to underperform almost all major global stock markets in 2012. The Shanghai Composite index is now down 36 percent from its 2009 peak — a period in which the S&P 500 Index soared 44 percent.

The reason: China suffers from self-inflicted economic wounds. Its past reliance on an export-led growth model was fine ... when the global economy was going strong. But as you can see in the chart below, China's trade volumes are shrinking, and the global economy is forecast to expand just 2.1 percent in 2012.



Years of over-investment in China has led to a glut of unused industrial capacity and a real estate bubble, souring investor confidence. On top of that, according to the World Trade Organization (WTO), global trade volume expanded just 5 percent last year, down from 13.8 percent in 2010, and is expected to slow further to just 3.7 percent this year.

The result: China's industrial output growth in August fell to the lowest level in three years. The People's Bank of China is cutting interest rates, the same as many other central banks around the world. But investors worry that further easing may only inflate property values without doing much for the real economy ... that sounds familiar.

Unfortunately, there is not much evidence pointing to a turnaround for China's economy anytime soon.

Some Good News in 
Select Emerging Markets

Of course China is certainly not alone in experiencing a manufacturing slowdown as a result of the downshift in global growth — it's just more apparent for their export-led economy.

A recent survey of global manufacturing purchasing managers index (PMI) readings by Bloomberg finds 20 out of 24 countries are showing contraction in their manufacturing sector. The countries that still have expanding PMI's include: Mexico, India, Russia, and Ireland.


India, for example, is much less reliant on export growth than its neighbor China. And its economy should expand 6 percent this year — certainly in the top-tier among global GDP growth. Global investors have noticed ...

Net equity inflows from foreign investors have surged $12.5 billion so far this year, equal to 10.9 percent of India's total stock market value.

It's no surprise that India's stock market has been one of the better emerging market performers ... up nearly 20 percent year-to-date and tops among the big-four BRIC markets.

The Bright Spot in Europe

In Europe, where many stock markets, both emerging and developed, have been crushed this year by the European debt crisis, Russia has been a bright spot with its equity market up 12 percent this year. Granted, its economy remains closely linked with commodity prices, particularly energy. But Russia's economy should grow 3.7 percent this year.

And Russia's recent entry into the WTO could provide the same kind of boost to its economy as it did for China over a decade ago. Plus, Russian stocks are among the world's biggest bargains, trading at less than six times earnings today.

Bottom line: Despite the ongoing and high profile underperformance of markets like China, not all emerging markets are lagging, and several are beginning to take the lead in performance. That's why global investors must differentiate between the fundamentals of each market — evaluating them one country at a time.

Good investing,

Mike Burnick


About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. 


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