Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Actionable Ideas, Emerging Economies


Good tradable rally could happen in the near term.


Sometimes having the facts about the market environment in which investors operate can be very beneficial. In my podcast interview, conducted yesterday with Sam Stovall, Chief Investment Strategist at Standard and Poor's Equity Research, there were more than a few pertinent items that investors should consider.

Since 1945:

  • Fourth quarter of a US presidential year +3.5%
  • First year of new Democratic administration +14.2%
  • One-party rule +10.4%
  • November through April +7% (approx.)

Investment Strategy Implications

While history offers no guarantees on future results, the above data, along with my technical analysis work (recent across the board non-confirmation lows), suggest a good tradable rally is the higher probability for stocks over the near term.

Moreover, the high degree of investor pessimism and fear, along with the mountain of cash sitting on the sidelines ($3.3 trillion, approx. 40% of the S&P 500), is also supportive of higher equity prices. Lastly, there's the valuation argument led by none other than Warren Buffett. All together, it's hard to be overly bearish at current market levels.

Now, some actionable ideas: Because global growth in emerging economies will withstand (within reason) the significant slowdown in developed economies, I believe most emerging markets' prices look especially attractive at current levels. They're among the very best babies thrown out with the bathwater, courtesy of mutual and hedge funds' indiscriminate selling induced by forced liquidations.

Two names to consider:

EEM (Emerging Markets): Gives broad exposure to the category.

Click to enlarge.

EWZ (Brazil): Strong fundamentals, reduced exposure to US.

Click to enlarge.

No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos