If you are an amateur investor, you may think that the only place to invest is in the US stock market. More experienced investors might know of other exchanges, such as the European and Canadian exchanges. However, the emerging investment markets are often overlooked and can really be a diamond in the rough. This name is given to markets in developing countries, where economic growth is expected to grow two or three times more rapidly than in developed countries.
Some of the countries Jason Hartman includes in this analysis are South Africa, Brazil, Peru, Mexico and Indonesia. Oftentimes, companies in these countries are few and disorganized. All it takes is one person or group with a great idea, and funding, to take over the market share and thus provide investors with large profits. Take a look at the South African region. It is no secret that Africa has always been known to have a great amount of resources, and countries such as China, India and Brazil are ready to start digging in. This attention from key world players make potential investing all-stars a possibility, people just have to look carefully and always diligently research potential investments.
If you are a busy person and do not have hours to spend looking at expenditure reports and balance sheets for different companies, perhaps a more broad approach will do. Go into Morgan Stanley’s Emerging Markets index to educate yourself on how the top companies are doing in these countries, and minimize your search time. Another option is looking for mutual funds that invest heavily on emerging markets, this way you know that professionals are handling the business end of things. This last option does not take away all of the research time though. Make sure that if a mutual fund is chosen, that it has a high Morningstar or Zacks rating, and that it has performed above average as compared to its peers.
Do not be fooled by the grand opportunities that emerging markets provide. There are many stories out there of people that have made a great profit trading in these markets, and they are probably telling the truth, but this is by far the norm. The risks on these investments are just as probable as in any market. Do not invest money that cannot be lost, because there is
no such thing as a “sure thing” in the stock market. The only sure thing is FDIC insured money markets, CDs and other types of interest bearing accounts. If security is what you are after, then diving into this type of investments is probably not the best idea. The dangers are even greater in these markets, as there are additional political, economical and currency risks. The developing countries are not usually the most stable and this is a key factor that should be taken into account. Investing in these markets should not be done if you are looking for a low volatility conservative opportunity. (Top image: Flickr | Svadilfari)
The Young Wealth Team