Author: Daniel Beckerman, Beckerman Institutional
Covestor portfolio: Flexible Value
As we approach the year end, we are experiencing a much yearned for, although fairly muted, Santa Claus rally.
The European Central bank has been quietly engaging in its own form of quantitative easing, while publicly talking it down. Based on recent economic data, including meager yet positive GDP growth, it appears that despite a great deal of short term risks, the U.S. is currently on a muddle-through path. China seems to have dodged a hard landing that some (most notably famed short-seller Jim Chanos) are betting on.
On the whole, emerging market stocks are relatively cheap if we look at forward earnings. Furthermore the “EM” countries have less debt and a rising industrial and consumer base in contrast to most of the developed world. The emerging markets have largely underperformed the U.S. this year and we are aware that emerging market stocks generally have carried higher betas than their U.S. counterparts. We do think, however, that this may be a part of the world to consider building exposure to when we see major dips in the market.
Some of the Covestor Model Managers who focus directly on the Emerging Markets are Joseph Agresti, Jose Ramon Fabrega, Diddi Capital, and Andy Djordjalian. Anyone investing in this area has to think long term and expect significant volatility and downside risk in the short term.
