Emerging Markets

Discussion of the Stock portion of the Permanent Portfolio

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eufo
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Re: Emerging Markets

Post by eufo » Thu Mar 23, 2017 9:29 pm

Desert wrote:
eufo wrote: Also, he speaks of recency, but most EM are up substantially as of "recent", so explain to me how recency might make someone avoid EM.

Bah, the whole article just gets me riled up! >:(
Rather than getting riled, you may want to read the article again. :)
The second mistake is that investors are subject to recency—allowing more recent returns to dominate their decision-making. From 2008 through 2016, the S&P 500 Index returned 7.1% per year, providing a total return of 85.5%.

During the same period, the MSCI Emerging Markets Index lost 1.3% a year, providing a total return of -11.3%. It managed to underperform the S&P 500 Index by 8.4 percentage points per year and posted a total return underperformance gap of 96.8 percentage points.
No, I read that part. I'm talking more about returns this year. VTI up less than 5% while VWO is up more than 12%

http://stockcharts.com/freecharts/perf.php?vti,vwo
Don't agree with me too strongly or I'm going to change my mind
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pugchief
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Re: Emerging Markets

Post by pugchief » Thu Mar 23, 2017 10:11 pm

stuper1 wrote:
Tyler wrote:Emerging markets are a fine component to a portfolio in the right dosage.
Tyler, I have a question about your portfoliocharts.com website. Do you have a calculator that will do something like the following: I pick a certain number of specific assets, say 2 to 10 specific assets. Then, I ask the calculator to crunch the numbers and tell me what "dosage" of each asset would have given me the best long-term return (but based on multiple calculations using many possible start dates). Basically, I'm looking for a portfolio optimization calculator. I tell it the ingredients I want in my portfolio, and the calculator tells me the "dosage" for each ingredient.
stuper1, try this: https://www.portfoliovisualizer.com/optimize-portfolio
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Tyler
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Re: Emerging Markets

Post by Tyler » Thu Mar 23, 2017 10:45 pm

Desert wrote:
Tyler wrote:Emerging markets are a fine component to a portfolio in the right dosage.

But the more I read Swedroe extol the virtues of valuations and expected returns, it strikes me that despite the one passive portfolio named after him he's really not a passive investor at all. Adviser gonna advise.
I have no idea how you concluded that.
One of the problems I've always had including a Swedroe portfolio on the site is that it's surprisingly difficult to pin down. The funds he recommends in books, articles, and posts actually change pretty often. A few Swedroe fans used to email me that I was posting the wrong portfolio, only to find out that we were looking at different sources.

I finally figured out that the two things he consistently values are 1) mean variance optimization, and 2) expected returns based on current valuations. He believes in balancing small chunks of assets with the highest expected returns and larger chunks of stable income-producing assets. The concept stays constant, but his specific fund recommendations occasionally change along with expected returns.

That's all fine, but I get a little frustrated when he backtests a portfolio for decades as if it was passive but does not recommend the same one for more than a few years. That said, I have no problem using his ideas as an example lazy portfolio because they do address volatility reduction pretty well.
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Desert
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Re: Emerging Markets

Post by Desert » Fri Mar 24, 2017 10:12 am

Tyler wrote:
Desert wrote:
Tyler wrote:Emerging markets are a fine component to a portfolio in the right dosage.

But the more I read Swedroe extol the virtues of valuations and expected returns, it strikes me that despite the one passive portfolio named after him he's really not a passive investor at all. Adviser gonna advise.
I have no idea how you concluded that.
One of the problems I've always had including a Swedroe portfolio on the site is that it's surprisingly difficult to pin down. The funds he recommends in books, articles, and posts actually change pretty often. A few Swedroe fans used to email me that I was posting the wrong portfolio, only to find out that we were looking at different sources.

I finally figured out that the two things he consistently values are 1) mean variance optimization, and 2) expected returns based on current valuations. He believes in balancing small chunks of assets with the highest expected returns and larger chunks of stable income-producing assets. The concept stays constant, but his specific fund recommendations occasionally change along with expected returns.

That's all fine, but I get a little frustrated when he backtests a portfolio for decades as if it was passive but does not recommend the same one for more than a few years. That said, I have no problem using his ideas as an example lazy portfolio because they do address volatility reduction pretty well.
OK, I see what you mean. I agree, he tends to present the portfolio(s) as a concept, but each time you look, he's using a bit different mix of funds. I suspect some of that is because there have been new funds introduced in the space he's looking to invest, especially international small value. Then you add in the fact that he adjusts the ratios depending on risk tolerance, and it makes it very hard indeed to nail down exactly what a "Larry" portfolio is.

But even with all that, I find his concepts pretty useful. I don't think he was the guy who came up with the concept of a small slice of volatile assets coupled with a larger slice of low-volatility assets, but he's done the best job of describing, defending and popularizing the idea. Now if we could just get him to understand gold's place in a portfolio ... :)
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Tyler
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Re: Emerging Markets

Post by Tyler » Fri Mar 24, 2017 10:36 am

Desert wrote: But even with all that, I find his concepts pretty useful. I don't think he was the guy who came up with the concept of a small slice of volatile assets coupled with a larger slice of low-volatility assets, but he's done the best job of describing, defending and popularizing the idea.
Totally agree. His concepts are definitely insightful and helpful. Well, except for the gold hate. ;)
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ochotona
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Re: Emerging Markets

Post by ochotona » Fri Mar 24, 2017 2:53 pm

I found an EM ETF with 16% China, not 27%. It's FNDE. If I pair it with Meb Faber's EM-like GVAL, I can get the China exposure to 8%.

I am concerned China is another central bank and real estate bubble, and their growth stats are all fictions.
D1984
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Re: Emerging Markets

Post by D1984 » Fri Mar 24, 2017 9:06 pm

ochotona wrote:I found an EM ETF with 16% China, not 27%. It's FNDE. If I pair it with Meb Faber's EM-like GVAL, I can get the China exposure to 8%.

I am concerned China is another central bank and real estate bubble, and their growth stats are all fictions.

If I recall correctly EDOG (the S-Network EM Dividend Dogs ETF) is actually around 8 or 9% China; it has only existed for a few years but the underlying index goes back to 2004 and has roughly equaled DFEVX or DEMSX with much less than the maxDD of either of those funds or even EEM.

I take it XCEM is too thinly traded and is a concern for being at ~11M in assets on on the ETF deathwatch list?
hrnzkn
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Re: Emerging Markets

Post by hrnzkn » Sun Nov 19, 2017 10:38 am

I have experiences about turkey bonds.. there is nice income especially energy bonds. For example: energy company TUPRS risen up %100 percent only in 1 year.
Don
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Re: Emerging Markets

Post by Don » Sun Nov 19, 2017 1:40 pm

hrnzkn wrote:I have experiences about turkey bonds.. there is nice income especially energy bonds. For example: energy company TUPRS risen up %100 percent only in 1 year.
Especially right around Thanksgiving.
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Desert
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Re: Emerging Markets

Post by Desert » Sun Nov 19, 2017 5:00 pm

Don wrote:
hrnzkn wrote:I have experiences about turkey bonds.. there is nice income especially energy bonds. For example: energy company TUPRS risen up %100 percent only in 1 year.
Especially right around Thanksgiving.
;D
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