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Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 8:51 am
by hdas
But few gain sufficient experience in Wall Street to command success until they reach that period of life in which they have one foot in the grave. When this time comes these old veterans of the Street usually spend long intervals of repose at their comfortable homes, and in times of panic, which recur sometimes oftener than once a year, these old fellows will be seen in Wall Street, hobbling down on their canes to their brokers' offices.

Then they always buy good stocks to the extent of their bank balances, which have been permitted to accumulate for just such an emergency. The panic usually rages until enough of these cash purchases of stock is made to afford a big "rake in". When the panic has spent its force, these old fellows, who have been resting judiciously on their oars in expectation of the inevitable event, which usually returns with the regularity of the seasons, quickly realize, deposit their profits with their bankers, or the over-plus thereof, after purchasing more real estate that is on the up grade, for permanent investment, and retire for another season to the quietude of their splendid homes and the bosoms of their happy families
Fifty Years in Wall Street, Henry Clews

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 8:58 am
by munemaker
I don't know what this means.

Is there a question in there somewhere?

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 8:59 am
by nisiprius
I shall ignore the 110-year-old anecdote about alleged successes of unidentified "old veterans of Wall street" unless you can convince me that those venerable gents were investing in emerging markets index funds in 1908.

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 9:03 am
by k66
Now Hear This: Load torpedo bay "EM"; Commence Market Timing at will.

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 9:05 am
by AlohaJoe
nisiprius wrote:
Wed Aug 15, 2018 8:59 am
I shall ignore the 110-year-old anecdote about alleged successes of unidentified "old veterans of Wall street" unless you can convince me that those venerable gents in were investing in emerging markets index funds in 1908.
Well, apparently Henry Clews was a British citizen who was investing in the US by the 1850s. I think the US was an emerging market back then, especially from a British perspective :)

He seems to have a been a bond trader, making him even more exotic: someone who invested in emerging markets government bonds that were denominated in the local currency!

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 9:07 am
by AlohaJoe
All Real Bogleheads ™ look to grap0013, praise be his username, for all of our emerging markets market timing predictions: viewtopic.php?f=10&t=182107

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 9:11 am
by nedsaid
So based on this post, am I supposed to buy up Turkish stocks like crazy?

The post mentioned nothing about Emerging Markets except in the title. Emerging Markets are what I call "Tiger in the Tank" investments, a high octane additive to give your investments more oomph. But these are risky and volatile investments, not like the Blue Chip stocks that old Wall Streeters load up on in times of crisis.

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 10:44 am
by MJW
nedsaid wrote:
Wed Aug 15, 2018 9:11 am
So based on this post, am I supposed to buy up Turkish stocks like crazy?
Haven't their stocks already suffered enough? :P

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 10:55 am
by triceratop
AlohaJoe wrote:
Wed Aug 15, 2018 9:07 am
All Real Bogleheads ™ look to grap0013, praise be his username, for all of our emerging markets market timing predictions: viewtopic.php?f=10&t=182107
+1 :)

I bought 25 VWO this morning.

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 11:40 am
by jhfenton
triceratop wrote:
Wed Aug 15, 2018 10:55 am
AlohaJoe wrote:
Wed Aug 15, 2018 9:07 am
All Real Bogleheads ™ look to grap0013, praise be his username, for all of our emerging markets market timing predictions: viewtopic.php?f=10&t=182107
+1 :)

I bought 25 VWO this morning.
:beer I "went big" with 97 VWO split between two accounts (76 and 21) and 14 VSS. It was just a tiny bit more than necessary to get me back to my baseline. The 21 finished maxing out my wife's Roth for the year (with the odd cents going into VEMAX).

I don't have grap0013's foresight, so I will probably rebalance all the way to his calling the next EM bottom.

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 11:48 am
by Northern Flicker
AlohaJoe wrote:
Wed Aug 15, 2018 9:05 am
nisiprius wrote:
Wed Aug 15, 2018 8:59 am
I shall ignore the 110-year-old anecdote about alleged successes of unidentified "old veterans of Wall street" unless you can convince me that those venerable gents in were investing in emerging markets index funds in 1908.
Well, apparently Henry Clews was a British citizen who was investing in the US by the 1850s. I think the US was an emerging market back then, especially from a British perspective :)
All markets were emerging markets until the Securities Act of 1933 in the US got the ball rolling on regulation of markets.

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 12:59 pm
by Northern Flicker
Largest driver of the EM sell off today:

CNYA and MCHI (Chinese equities) are both down over 4% in USD valuation. Other individual country EM equity indices are down less than aggregate EM indices in USD valuation.

TUR (Turkish equities) is up almost 3% in USD valuation

Edit: EZA (South Africa) is down over 5%.

Also thought this was interesting:

https://money.cnn.com/2018/08/15/techno ... index.html

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 2:59 pm
by hdas
Let us time stamp those prices right immediately after the alacritous and cryptic pronouncement:

VSS 110.16
VWO 40.44
IEMG 49.95

Cheers, :greedy

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 3:57 pm
by Castanea_d.
I hobbled to my computer, cane in hand, and rebalanced into VEMAX on Monday, just in time for EMs to drop some more. Gotta love 'em. :happy

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 4:17 pm
by Theoretical
The valuations are reaching stupidly low levels again for EM value, but 1, I have large capital gains in them so I’m not going to sell and 2, I’m not going to catch a falling knife needlessly to buy more beyond the current auto 401k purchases

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 4:26 pm
by nisiprius
jalbert wrote:
Wed Aug 15, 2018 11:48 am
AlohaJoe wrote:
Wed Aug 15, 2018 9:05 am
nisiprius wrote:
Wed Aug 15, 2018 8:59 am
I shall ignore the 110-year-old anecdote about alleged successes of unidentified "old veterans of Wall street" unless you can convince me that those venerable gents in were investing in emerging markets index funds in 1908.
Well, apparently Henry Clews was a British citizen who was investing in the US by the 1850s. I think the US was an emerging market back then, especially from a British perspective :)
All markets were emerging markets until the Securities Act of 1933 in the US got the ball rolling on regulation of markets.
I was going to say the opposite: no markets were emerging markets before 1981, because the term wasn't coined until then. :P

But if he was investing in US bonds, that's pretty impressive, because in 1843, when Charles Dickens wrote "A Christmas Carol," US securities were apparently a byword for unsoundness.
"three days after sight of this First of Exchange pay to Mr. Ebenezer Scrooge or his order,” and so forth, would have become a mere United States’ security if there were no days to count by...

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 4:30 pm
by triceratop
Theoretical wrote:
Wed Aug 15, 2018 4:17 pm
The valuations are reaching stupidly low levels again for EM value, but 1, I have large capital gains in them so I’m not going to sell and 2, I’m not going to catch a falling knife needlessly to buy more beyond the current auto 401k purchases
Where do you get your (current, I hope, updated daily/weekly) valuation information for EM value? Morningstar has data for funds like FNDE but I don't know how often they update each component of the ratios. Is there index level data?

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 4:32 pm
by montanagirl
munemaker wrote:
Wed Aug 15, 2018 8:58 am
I don't know what this means.

Buy the dip.

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 5:04 pm
by tesuzuki2002
montanagirl wrote:
Wed Aug 15, 2018 4:32 pm
munemaker wrote:
Wed Aug 15, 2018 8:58 am
I don't know what this means.

Buy the dip.
+1

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 5:35 pm
by Theoretical
triceratop wrote:
Wed Aug 15, 2018 4:30 pm
Theoretical wrote:
Wed Aug 15, 2018 4:17 pm
The valuations are reaching stupidly low levels again for EM value, but 1, I have large capital gains in them so I’m not going to sell and 2, I’m not going to catch a falling knife needlessly to buy more beyond the current auto 401k purchases
Where do you get your (current, I hope, updated daily/weekly) valuation information for EM value? Morningstar has data for funds like FNDE but I don't know how often they update each component of the ratios. Is there index level data?
Fidelity has very good info and it’s up to date, using trailing rather than forward metrics on some.

Re: Take your canes out in Emerging Markets

Posted: Wed Aug 15, 2018 5:44 pm
by triceratop
Thanks Theoretical. :beer

Re: Take your canes out in Emerging Markets

Posted: Thu Aug 16, 2018 11:40 am
by nedsaid
MJW wrote:
Wed Aug 15, 2018 10:44 am
nedsaid wrote:
Wed Aug 15, 2018 9:11 am
So based on this post, am I supposed to buy up Turkish stocks like crazy?
Haven't their stocks already suffered enough? :P
Based upon my experience with the "Nedsaid effect", I am sure they would dive soon after purchase.

Your post reminds me of the old saying that the beatings will continue until morale improves.

Re: Take your canes out in Emerging Markets

Posted: Thu Aug 16, 2018 3:19 pm
by Jeff Albertson
Theoretical wrote:
Wed Aug 15, 2018 4:17 pm
The valuations are reaching stupidly low levels again for EM value, but 1, I have large capital gains in them so I’m not going to sell and 2, I’m not going to catch a falling knife needlessly to buy more beyond the current auto 401k purchases
The Economist "The contrarian case for emerging markets"
https://www.economist.com/finance-and-e ... ng-markets
Image
no guarantees!

Re: Take your canes out in Emerging Markets

Posted: Thu Aug 16, 2018 3:42 pm
by Theoretical
Jeff Albertson wrote:
Thu Aug 16, 2018 3:19 pm
Theoretical wrote:
Wed Aug 15, 2018 4:17 pm
The valuations are reaching stupidly low levels again for EM value, but 1, I have large capital gains in them so I’m not going to sell and 2, I’m not going to catch a falling knife needlessly to buy more beyond the current auto 401k purchases
The Economist "The contrarian case for emerging markets"
https://www.economist.com/finance-and-e ... ng-markets
Image
no guarantees!
FWIW, I’m at my target of 10% EM, so my post was to say that I’m not putting way more into something going down sharply but neither am i liquidating.

Re: Take your canes out in Emerging Markets

Posted: Mon Aug 27, 2018 9:00 am
by hdas
hdas wrote:
Wed Aug 15, 2018 2:59 pm
Let us time stamp those prices right immediately after the alacritous and cryptic pronouncement:

VSS 110.16
VWO 40.44
IEMG 49.95

Cheers, :greedy
One notes enough cash purchases were made to afford a big "rake in". Perhaps the old fellows are thinking about hobbling back to wall street

VSS 115.09
VWO 42.88
IEMG 53.11

Cheers :greedy

Re: Take your canes out in Emerging Markets

Posted: Thu Aug 30, 2018 10:14 am
by hdas
Looks like Mr. Livesoft will be busy today on VWO. H

Cheers :greedy

Re: Take your canes out in Emerging Markets

Posted: Thu Aug 30, 2018 10:44 am
by boglewill34
Happily, I just increased my automated buys (raises) and will execute a buy of more SFENX today (Schwab emerging). It's been down quite a bit all year thus far.

Re: Take your canes out in Emerging Markets

Posted: Fri Sep 14, 2018 1:09 pm
by hdas
For ppl that need help with a narrative that the future might be different than present

China Is Overtaking the U.S. in Scientific Research
Thirty years ago in December, the modern exchange of scholars between the U.S. and China began. Since then, Chinese academics have become the most prolific global contributors to publications in physical sciences, engineering and math. Recent attempts by the U.S. to curtail academic collaboration are unlikely to change this trend.
Caveat: Tally should weight quality of research

Link: https://www.bloomberg.com/view/articles ... in-science

Re: Take your canes out in Emerging Markets

Posted: Fri Sep 14, 2018 1:18 pm
by triceratop
hdas wrote:
Fri Sep 14, 2018 1:09 pm
For ppl that need help with a narrative that the future might be different than present

China Is Overtaking the U.S. in Scientific Research
Thirty years ago in December, the modern exchange of scholars between the U.S. and China began. Since then, Chinese academics have become the most prolific global contributors to publications in physical sciences, engineering and math. Recent attempts by the U.S. to curtail academic collaboration are unlikely to change this trend.
Caveat: Tally should weight quality of research

Link: https://www.bloomberg.com/view/articles ... in-science
anecdote: I have yet to read a paper usefully informing my scientific field which has come out of China.

I think this data doesn't contain enough signal to make any kind of tactical allocation, even if I were someone who did things like that.

Re: Take your canes out in Emerging Markets

Posted: Fri Sep 14, 2018 6:36 pm
by JBTX
Jeff Albertson wrote:
Thu Aug 16, 2018 3:19 pm
Theoretical wrote:
Wed Aug 15, 2018 4:17 pm
The valuations are reaching stupidly low levels again for EM value, but 1, I have large capital gains in them so I’m not going to sell and 2, I’m not going to catch a falling knife needlessly to buy more beyond the current auto 401k purchases
The Economist "The contrarian case for emerging markets"
https://www.economist.com/finance-and-e ... ng-markets
Image
no guarantees!
Pretty interesting chart. I may actually buy some EM. Probably need to rebalance anyway. But if I have to guess it will get worse before it gets better.

Re: Take your canes out in Emerging Markets

Posted: Fri Sep 14, 2018 6:43 pm
by MJW
Looks like they still have plenty of room to plummet.

Re: Take your canes out in Emerging Markets

Posted: Tue Sep 18, 2018 12:28 pm
by hdas
A nice McKinsey report on emerging economies: HIGH-GROWTH EMERGING ECONOMIES AND THE COMPANIES THAT PROPEL THEM

A few takeaways:
1. While the economy != stock market, in the long run both go together
2. Seems like country/region picking could be apt
3. Watch out for pro-growth government agenda is key

Image

Cheers :greedy

Re: Take your canes out in Emerging Markets

Posted: Wed Sep 19, 2018 11:59 am
by hdas
Managers Positioning

Image

Re: Take your canes out in Emerging Markets

Posted: Wed Sep 19, 2018 12:24 pm
by bgf
hdas wrote:
Wed Sep 19, 2018 11:59 am
Managers Positioning

Image
wow, really shows that for whatever reason markets participants' expectations are crashing through the basement floor with respect to emerging markets. i think those expectations are going to improve over the next few years.

good luck.

Re: Take your canes out in Emerging Markets

Posted: Thu Sep 27, 2018 5:29 pm
by hdas
For all the fellow travelers to busy to read the excellent book "Mystery of Capital by De Soto, this 60min video is very apt framework to look at the future of emerging markets. Cheers :greedy

Re: Take your canes out in Emerging Markets

Posted: Thu Sep 27, 2018 6:44 pm
by Elysium
bgf wrote:
Wed Sep 19, 2018 12:24 pm
hdas wrote:
Wed Sep 19, 2018 11:59 am
Managers Positioning

Image
wow, really shows that for whatever reason markets participants' expectations are crashing through the basement floor with respect to emerging markets. i think those expectations are going to improve over the next few years.

good luck.
One reason, Tariffs.

Re: Take your canes out in Emerging Markets

Posted: Thu Oct 18, 2018 10:19 am
by hdas
Worrisome Article: https://www.bloomberg.com/news/articles ... anic-risks
China May Have $5.8 Trillion in Hidden Debt With ‘Titanic’ Risks

Re: Take your canes out in Emerging Markets

Posted: Thu Oct 18, 2018 2:17 pm
by garlandwhizzer
No doubt that hidden debt is a risk for China and we don't know accurately the full extent of the problem.

Having said that it's important to recall that the greatest global debt default crisis since the Great Depression originated right under our blind eyes in the USA with the massive financial collapse of 2007-9. At no time in human history and in no country in the world prior to that were massive mortgages issued to homebuyers without any evidence whatsoever of asset base or income. All it took was a signature to gain access to hundreds of thousands of dollars. The banks that issued these toxic loans then quickly bundled them and sold them to others, both the US government and the financial industry. They were able to market them easily this because the US rating agencies for a juicy fee declared that a bundle of these sub-prime absurd loans was in fact a reliable high grade financial instrument. Then Wall Street saw an opportunity and created massive new derivative products based on the future performance of these underlying assets, hundreds of billions of dollars bet on this for of course more juicy fees. Of course it collapsed completely, but not one high executive in this long chain of profitable lies and misrepresentations went to jail. The result threatened the complete collapse of the worldwide financial system. And yet before it happened the entire US financial media, essentially all investment gurus, and the academic investment community--none of them noticed that anything was wrong. Instead they were typically awash with optimism.

We should keep in mind that China isn't the only place in the world where dodgy financial things are done by those in positions of authority both in government and in the private sector.

Garland Whizzer

Re: Take your canes out in Emerging Markets

Posted: Thu Oct 18, 2018 4:23 pm
by Valuethinker
garlandwhizzer wrote:
Thu Oct 18, 2018 2:17 pm
No doubt that hidden debt is a risk for China and we don't know accurately the full extent of the problem.

Having said that it's important to recall that the greatest global debt default crisis since the Great Depression originated right under our blind eyes in the USA with the massive financial collapse of 2007-9. At no time in human history and in no country in the world prior to that were massive mortgages issued to homebuyers without any evidence whatsoever of asset base or income. All it took was a signature to gain access to hundreds of thousands of dollars. The banks that issued these toxic loans then quickly bundled them and sold them to others, both the US government and the financial industry. They were able to market them easily this because the US rating agencies for a juicy fee declared that a bundle of these sub-prime absurd loans was in fact a reliable high grade financial instrument. Then Wall Street saw an opportunity and created massive new derivative products based on the future performance of these underlying assets, hundreds of billions of dollars bet on this for of course more juicy fees. Of course it collapsed completely, but not one high executive in this long chain of profitable lies and misrepresentations went to jail. The result threatened the complete collapse of the worldwide financial system. And yet before it happened the entire US financial media, essentially all investment gurus, and the academic investment community--none of them noticed that anything was wrong. Instead they were typically awash with optimism.
The CDO and the CDS had been around for a long time. The US mortgage system is founded on the Mortgage Backed Security which dates from the 1940s.

Michael Lewis takes you through the history in The Big Short. There were a couple of innovations in the 2000s that supercharged it. One was a Chinese actuary at a Canadian university (Waterloo) who came up with an application of the Gaussian Copula - the joint probability of default of 2 mortgages. That allowed the Credit Rating Agencies to rate the things.

Actually a number of people were sounding the alarm. Dean Baker at the Economic Policy Institute in particular. Meredith Whitney. There were others. Paul Krugman was talking about the housing bubble (but he points to Dean Baker as the earliest economic commentator to write about it).

And there was Calculated Risk. Both Bill McBride who runs the blog, and the late Tanta who worked in mortgage securitization before she became ill.
We should keep in mind that China isn't the only place in the world where dodgy financial things are done by those in positions of authority both in government and in the private sector.

Garland Whizzer
Oh yes.

I would recommend Daryl Cunningham's graphic book on the Crash

https://www.amazon.com/gp/product/14197 ... bl_vppi_i3

which is a very interesting deep dive into the history of the underpinnings of the Alan Greenspan's ideology and deregulation.

Also John Quiggin "Zombie Economics"

https://www.amazon.com/Zombie-Economics ... fkmrnull_1

Anne Petifor (she's a very good speaker if you get a chance or find a podcast)

https://www.amazon.com/Coming-First-Wor ... ref=sr_1_2

also called the crisis before it happened - that book is dated 2006.

Re: Take your canes out in Emerging Markets

Posted: Wed Nov 21, 2018 12:18 pm
by hdas
Interesting Ray Dalio's remarks about China,

Specifically:

1. Productivity growth
2. Ability to work themselves out of a debt crisis by virtue of having their own currency + having mostly local debt
3. Proactive policy makers

To rhyme with this, VWO up 2%+ as I write. :greedy

Re: Take your canes out in Emerging Markets

Posted: Fri Jan 25, 2019 10:22 pm
by hdas
This divergence is getting dramatic:

Image

Cheers :greedy