I’m sure you’ve heard this truism: Wall Street doesn’t ring a bell when it’s time to buy or sell.
Well, I am ringing the equivalent of London’s Big Ben for you.
A massive investment trend began in December of 2012 … a sign that all the components are in place for one particular asset class to give you phenomenal profits in 2013. Miss this trend and you will miss the best opportunity of the year to double or triple your money.
Here’s the challenge you face, though: The bell’s peal reverberates only in the data, not in auditory sound. And if you’re not paying attention to the source of the data, well, you’ll simply never hear the bell.
Here’s what the bell sounds like when you know what to listen for:
• Malaysian stocks picked up 6.8% in 2012 – but 65% of that gain, nearly 4.5 percentage points, occurred in December.
• Brazil picked up 67% of its full-year gain in December.
• South Korea gained more than a third of its total 2012 return just in December.
• For Russia – up more than 5% for the year – December represented 99.4% of returns that the market gave to investors for all of 2012.
• Poland captured a third of its total return in December alone.
• Indonesia grabbed a quarter of its full-year returns in December.
• Egypt spent much of the year in the red, and ended the year in the red. But December was up a very strong 12.4%.
• And consider Portugal … one of the PIGS quartet the world loves to hate. It lost 2.2% in 2012 … but in December alone it racked up gains of 7.8% – the strongest showing in all of Europe.
In short, something happened late in 2012 that set off a reaction in global stock markets. Well, all those except in the U.S., where American stocks gained a whopping 0.72% in December, among the very worst returns in the world for that month. [adcode]
And I know what happened. It wasn’t just a single event; it was several events that combined to reverse the sour sentiments that have tormented global investors for several years now.
First, institutional investors have begun to worry less about the euro breaking apart – and I’ve been saying all along a break up wasn’t in the cards – content that Germany is moving in the right direction to hold the critically important euro zone together.
Second, in the wake of the U.S elections, businesses now have tax and policy certainty, which should lead to increased hiring and a modestly stronger American economy.
Third, free money will continue to flow out of the Federal Reserve, the European Central Bank, the Bank of Japan and others as Western nations continue to grapple with debt issues … and rising amounts of currency in the system – a sign of weakness in those economies that are printing money – always sees money flowing to stronger economies. And these days, those stronger economies are not in the West, but in the emerging markets of Asia, Africa and Latin America.
And, finally, the savvy money crowd is telling the world with its actions that China is going to be alright. What are those actions, you might wonder?
MSCI-Barra’s All China stock index gained 11.12% in December, representing 99.6% of its full-year gain. China’s H-Chip index is even more dramatic. The H-chip index, Hong Kong-listed shares of mainland Chinese companies, gained 16.95% in December, reversing a loss for the year and giving that index a gain of 15.9% for the year.
Such a dramatic reversal is a bell ringing. It’s the savvy money moving quickly into a market where it now sees great opportunities.
Where to Invest Now
Profiting from these ringing bells means you have to get in early. By the time the mass financial media tells you that China and other emerging markets are hot again, the trend will be near the top of the bell curve – the worst place to be as an investor.
So, I’m telling you now: 2013 is shaping up as a good year to be an emerging markets investor.
All the ingredients are in place. Global economies are looking healthier, central banks are dumping cash into the system still, investor perceptions are changing globally and the savvy money is already moving in that direction.
In the last month, my Emerging Market Strategist subscribers experienced this growing trend firsthand.
• Our stake in a $700 million Hong Kong-listed Chinese water-infrastructure company gained 17.7% in December alone.
• A Malaysian retail chain we own grabbed 14.8%.
• An Indonesian company that owns and leases mobile-phone towers gained 12.9%.
• A Singapore-based restaurant chain gained 9.7%.
• The Norwegian fish farm we own jumped up 9.5%.
Those trends have continued into the new year, indicating to me that December was not a one-off fluke. They tell me the bell is ringing, and that now’s the time to put your money to work in the emerging markets.
Question is … do you hear the bells?
Until next time, stay Sovereign…
Jeff D. Opdyke
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