EM buying opportunity? [Emerging Markets]

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whodidntante
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EM buying opportunity? [Emerging Markets]

Post by whodidntante » Sat Nov 12, 2016 1:38 pm

What is your stance on EM? Are you buying or over-rebalancing into it? Or is this time different (TM)?

livesoft
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Re: EM buying opportunity?

Post by livesoft » Sat Nov 12, 2016 1:42 pm

I bought some more this week, but so far I regret doing so.

I try to keep market weight in EM, but do not own VWO. The funds I own with EM in them are VEU, VSS, and DGS. The only other foreign fund I own is VEA. I assume readers of this thread will know what these ticker symbols are.
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Re: EM buying opportunity?

Post by ruralavalon » Sat Nov 12, 2016 1:47 pm

whodidntante wrote:What is your stance on EM? Are you buying or over-rebalancing into it? Or is this time different (TM)?

All of our international is in Vanguard Total International Stock Index Fund Admiral (VTIAX), we have no separate emerging market fund.
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Re: EM buying opportunity?

Post by nedsaid » Sat Nov 12, 2016 2:41 pm

Yes, I think Emerging Markets is a good opportunity here. I have been buying recently in small quantities. International in general and Emerging Markets in particular are cheaper than the US Market. I would just buy in over time since we don't know what will happen in the shorter term.
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whodidntante
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Re: EM buying opportunity?

Post by whodidntante » Sat Nov 12, 2016 4:34 pm

I am buying 1k every two weeks of DFA Emerging Markets Value. I've also taken advantage of tax loss harvesting, selling VWO for IEMG. Further losses wouldn't surprise me. EM can't catch a break.

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Re: EM buying opportunity?

Post by jalbert » Sat Nov 12, 2016 8:39 pm

I think the market is pricing in greater risk in EM after the US election and with inflation data increasing the odds of Fed tightening.

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Re: EM buying opportunity?

Post by LibertyLover » Sat Nov 12, 2016 9:33 pm

jalbert wrote:I think the market is pricing in greater risk in EM after the US election and with inflation data increasing the odds of Fed tightening.


I'm not an expert but isn't the drop in EM more related to currency fluctuations?

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Re: EM buying opportunity?

Post by cutehumor » Sat Nov 12, 2016 9:35 pm

as someone who has only 3% of emerging markets in my portfolio, I am BUYING. no telling how long this election discount keeps going. expect emerging market funds tank some more after 1/20 inauguration.

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Re: EM buying opportunity?

Post by Explorer » Sun Nov 13, 2016 12:26 am

I am neither buying nor selling EM right now - wait till 1Q 2017 to see what policies the new President starts to pursue...

Trump has been crowing about the Chinese not floating their currency (i.e.. manipulation).

We really need to see his trade restrictions/policies to form a real opinion.

In the mean time, I continue to add to VG total international stock index as and when I can.

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Re: EM buying opportunity?

Post by TropikThunder » Sun Nov 13, 2016 12:40 am

Explorer wrote:I am neither buying nor selling EM right now - wait till 1Q 2017 to see what policies the new President starts to pursue...

Trump has been crowing about the Chinese not floating their currency (i.e.. manipulation).

We really need to see his trade restrictions/policies to form a real opinion.

In the mean time, I continue to add to VG total international stock index as and when I can.


~18% of Vanguard Total Int'l is EM. So, you *are* buying EM. :)

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Re: EM buying opportunity?

Post by edge » Sun Nov 13, 2016 8:54 am

I don't understand the 'rebalance' comment. My EM allocation is above target and has been for some time.

Trying to time the market based on things D. J. Trump says seems like a really terrible strategy. There does not appear to be any relationship with the things he says and does.

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Re: EM buying opportunity?

Post by livesoft » Sun Nov 13, 2016 9:09 am

edge wrote:I don't understand the 'rebalance' comment. My EM allocation is above target and has been for some time.

I see. So you didn't rebalance out of EM when it was above target and before it dropped 7%? Hmmm.
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Re: EM buying opportunity?

Post by Tanelorn » Sun Nov 13, 2016 9:23 am

I covered my emerging markets short this past week. I guess that counts as buying.

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Re: EM buying opportunity?

Post by danaht » Sun Nov 13, 2016 9:30 am

My opinion - EM has been a buying opportunity for a long time. Even when it was at the 52 week high this year- it was still a buying opportunity. It's in a "lost decade" that will eventually reverse course. Although - If the US is successful at creating new tariffs - it might take a little longer.

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Re: EM buying opportunity?

Post by Wagnerjb » Sun Nov 13, 2016 12:15 pm

My barbell type strategy calls for a healthy dose of Emerging Markets. This may be a buying opportunity (I don't know, I don't care) but even after a recent pullback, EM has done excellent this year. Here are the EM funds that I hold:

DFCEX (Dimensional, EM): +11%
DEMSX (Dimensional, EM Small Cap): +11%
DFEVX (Dimensional, EM Value): +18%
DGS (WisdomTree, EM Small Value): +13%


EM hasn't always done great, but I am pretty sure that my diversification into international stocks has paid off (improved diversification. less volatility) since I began in the early 1980's. Stay the course.

Best wishes.
Andy

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whodidntante
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Re: EM buying opportunity?

Post by whodidntante » Sun Nov 13, 2016 1:00 pm

Wagnerjb wrote: EM has done excellent this year. Here are the EM funds that I hold:

DFCEX (Dimensional, EM): +11%
DEMSX (Dimensional, EM Small Cap): +11%
DFEVX (Dimensional, EM Value): +18%
DGS (WisdomTree, EM Small Value): +13%


I also own DFEVX and have seen some nice gains after years of doing nothing good. Morningstar made a poke at the fund: "DFA Emerging Markets Value is still worth owning, but difficult to own well."

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Re: EM buying opportunity?

Post by Wagnerjb » Sun Nov 13, 2016 2:15 pm

My point is that EM was even more of a "buying opportunity" at the beginning of the year than it is this week.
Andy

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Re: EM buying opportunity?

Post by edge » Sun Nov 13, 2016 11:23 pm

Looks like my last transaction was a buy towards the end of January 2016.

It is above target but not by enough to rebalance. Less than 0.38 percentage points. Taking action on these tiny minute market moves seems like mental shell games to me.

I also own DFEVX.

livesoft wrote:
edge wrote:I don't understand the 'rebalance' comment. My EM allocation is above target and has been for some time.

I see. So you didn't rebalance out of EM when it was above target and before it dropped 7%? Hmmm.

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Re: EM buying opportunity?

Post by triceratop » Mon Nov 14, 2016 12:05 pm

I bought more VWO today (at higher prices than I should have, 35.15, alas) to top off my allocation. I need to be more disciplined with ETF buying, I wish one could buy at NAV at the close like with mutual funds.

Anyway, this is a note to remind us that many of our bands were probably broken (I was personally still building up to my desired allocation). The declines are where the equity investor makes money.
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Re: EM buying opportunity?

Post by selftalk » Mon Nov 14, 2016 2:00 pm

Why not buy a total world etf or fund and forget all this market timing ?

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Re: EM buying opportunity?

Post by FillorKill » Mon Nov 14, 2016 4:51 pm

selftalk wrote:Why not buy a total world etf or fund and forget all this market timing ?


Because the day would come that I couldn't resist TLH'ing it. So, I'd go to similar proportions of US/ex-US funds (VTI/VXUS). Then one of those would inevitably underperform and I would TLH that into the underlying components in their appropriate proportions (VEU/VSS for VXUS as an example). Then one of those would underperform and I would TLH that into....

That nonsense would never end so, the obvious choice is keeping a leveraged 38 fund slice & dice portfolio with algorithmically determined (hourly during market hours) rebalance, TLH and tilt proportions. This is simplicity itself. Taylor told me about it.

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Re: EM buying opportunity?

Post by triceratop » Mon Nov 14, 2016 5:34 pm

selftalk wrote:Why not buy a total world etf or fund and forget all this market timing ?


1) Total World ETFs are costlier

2) Total World ETFs present fewer TLH / Tax Loss Gain harvesting opportunities

3) Total World ETFs may be less tax efficient, since some total international funds are notably more tax-efficient than others

4) Total World ETFs are not helpful if one wants to tilt to small/value.

None of the above constitute market timing.
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Re: EM buying opportunity?

Post by young-ish » Mon Nov 14, 2016 6:17 pm

A lot of market timers on this thread :greedy

I have a fixed asset allocation strategy. 1/3 of my international stock holdings are invested in Emerging Markets. I've kept that target since I first read Bill Bernstein about 15 years ago.

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Re: EM buying opportunity?

Post by livesoft » Mon Nov 14, 2016 7:00 pm

young-ish wrote:A lot of market timers on this thread :greedy

I have a fixed asset allocation strategy. 1/3 of my international stock holdings are invested in Emerging Markets. I've kept that target since I first read Bill Bernstein about 15 years ago.

OK, you've kept that target, but you didn't say if your portfolio has matched that target. I don't see how one's portfolio can match that target without some rebalancing along the way. :)
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Re: EM buying opportunity?

Post by livesoft » Mon Nov 14, 2016 7:09 pm

edge wrote:Looks like my last transaction was a buy towards the end of January 2016.

It is above target but not by enough to rebalance. Less than 0.38 percentage points. Taking action on these tiny minute market moves seems like mental shell games to me.

OK, so earlier this summer it was above target by much more when it was greater than 7% higher than it is today. "tiny minute market moves" mean exactly what to you? An 8% drop in a few weeks is not my definition of "tiny minute market moves", but I'm OK with calling it a modest market move.
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Re: EM buying opportunity?

Post by Dutch » Mon Nov 14, 2016 7:53 pm

I will continue to buy EM. I've been making monthly purchases for the last 1.5 - 2 years.

But I'm not sure I would qualify this as such a great buying opportunity. EM has been significantly lower - at many times - over the last year.

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Re: EM buying opportunity?

Post by triceratop » Mon Nov 14, 2016 8:09 pm

Dutch wrote:I will continue to buy EM. I've been making monthly purchases for the last 1.5 - 2 years.

But I'm not sure I would qualify this as such a great buying opportunity. EM has been significantly lower - at many times - over the last year.


It looks like a great buying opportunity for allocating funds which I did not possess until recent paychecks. 8-)

Of course, I was much more optimistic about International in January, but even now still more so than U.S. stocks.
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Re: EM buying opportunity?

Post by young-ish » Mon Nov 14, 2016 9:29 pm

livesoft wrote:
young-ish wrote:A lot of market timers on this thread :greedy

I have a fixed asset allocation strategy. 1/3 of my international stock holdings are invested in Emerging Markets. I've kept that target since I first read Bill Bernstein about 15 years ago.

OK, you've kept that target, but you didn't say if your portfolio has matched that target. I don't see how one's portfolio can match that target without some rebalancing along the way. :)


Yes, re-balancing is a must especially with a volatile asset like EM equity.

During accumulation years I added to assets that fell below my target allocation. During draw-down years I am selling assets that have appreciated above my target allocation.

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Re: EM buying opportunity?

Post by edge » Tue Nov 15, 2016 12:01 am

livesoft wrote:
edge wrote:Looks like my last transaction was a buy towards the end of January 2016.

It is above target but not by enough to rebalance. Less than 0.38 percentage points. Taking action on these tiny minute market moves seems like mental shell games to me.

OK, so earlier this summer it was above target by much more when it was greater than 7% higher than it is today. "tiny minute market moves" mean exactly what to you? An 8% drop in a few weeks is not my definition of "tiny minute market moves", but I'm OK with calling it a modest market move.


I only rebalance after much larger shifts than this. 5-7% increase of a 10% overall allocation doesn't move the needle. Especially in the context of the overall portfolio movement.

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Re: EM buying opportunity?

Post by livesoft » Tue Nov 15, 2016 6:41 am

edge wrote: I only rebalance after much larger shifts than this. 5-7% increase of a 10% overall allocation doesn't move the needle. Especially in the context of the overall portfolio movement.

Actually, it does move the needle by 0.5% to 0.7%. That's not insignicant and especially so if it happens more than once a year. I see a thread from today lamenting a 4.95% YTD return and I see folks on this forum falling all over themselves to reduce expense ratios by 0.1% or 0.2%. I do not discount an extra 0.5% return. It adds up.
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Re: EM buying opportunity?

Post by edge » Tue Nov 15, 2016 8:31 am

Less than 1% is insignificant. Rebalancing based on those types of shifts is not useful. You are oversimplifying and also simply incorrect regarding the 'extra 0.5% return' as if it is some kind of guarantee. In fact, you might have rebalanced out as it went higher and higher or bought in as things went lower and lower in the opposite case. It can 'add down' as well. You seem to have fallen into a trap where you haven't considered that possibility.


livesoft wrote:
edge wrote: I only rebalance after much larger shifts than this. 5-7% increase of a 10% overall allocation doesn't move the needle. Especially in the context of the overall portfolio movement.

Actually, it does move the needle by 0.5% to 0.7%. That's not insignicant and especially so if it happens more than once a year. I see a thread from today lamenting a 4.95% YTD return and I see folks on this forum falling all over themselves to reduce expense ratios by 0.1% or 0.2%. I do not discount an extra 0.5% return. It adds up.

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Re: EM buying opportunity? [Emerging Markets]

Post by nisiprius » Tue Nov 15, 2016 8:40 am

Total International for me, and that's it.

"Buying opportunity?" Come on, I don't even know what the next administration will do, and if I did, I wouldn't know what effect it will have.

And emerging markets are a very heterogeneous group, with nothing in common but what they aren't; while national policies are often targeted to specific countries. What's good for China isn't necessarily good for Brazil.
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Re: EM buying opportunity? [Emerging Markets]

Post by Valuethinker » Tue Nov 15, 2016 9:01 am

nisiprius wrote:Total International for me, and that's it.

"Buying opportunity?" Come on, I don't even know what the next administration will do, and if I did, I wouldn't know what effect it will have.

And emerging markets are a very heterogeneous group, with nothing in common but what they aren't; while national policies are often targeted to specific countries. What's good for China isn't necessarily good for Brazil.


Brasil for example has a high weighting to oil companies and natural resource related companies. So does South Africa. So does Russia.

EM these days tends to be "risk on" when the market just sells all of them, and "risk off" when a flood of money goes in.

It's easy to catch a falling knife in such a situation. Seeing "value" when actually what is going on is a definitive repricing of future prospects for the constituent companies.

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Re: EM buying opportunity? [Emerging Markets]

Post by Dulocracy » Tue Nov 15, 2016 10:01 am

My 401k offers 3 EM funds:

VEIEX (Vanguard EM with the China A shares)
DEMSX (Dimensional, EM Small Cap)
DFEVX (Dimensional, EM Value)

I was contributing of equities: 5% VEIEX, 2% DEMSX, and 3% to DFEVX (I am 60 US/ 40 intl, with 25% of Intl going to EM).

Because of concerns about China's A shares, I have switched new contributions to:
2% VEIEX, 5% DEMSX, and 3% to DFEVX

I have left the old allocation in place, however. (Semi market timing? Not touching old money, but shifting new investments.)

I am not sure if this answer's the OP's question, as it is not so much a buying opportunity for me as a shifting opportunity. I may be missing a lottery ticket or I may be missing a land mine. Time will tell. Certainly, I am interested in feedback as to whether this was an intelligent move or not.
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Re: EM buying opportunity? [Emerging Markets]

Post by sunnywindy » Tue Nov 15, 2016 10:53 am

As of yesterday's data (per Morningstar), VWO is a hair below it's 200 day moving average, so not a bad time to buy.
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Re: EM buying opportunity? [Emerging Markets]

Post by Engineer250 » Tue Nov 15, 2016 11:08 am

I'm in the TSP with only a developed fund so have to manually balance my EM fund in my IRA. My goal is that EM is about equal to total market weight. VG Total International says emerging makes up 20% so that's my goal. Due to also trying to increase my international allocation (via contribution) and already having sorted out my IRA, my EM is sitting at 25%. So won't be buying any more anytime soon. Buying developed international at the moment to get my numbers where I want them. Who knows what the future will bring, I certainly don't.
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