Tag Archive | Emerging Markets

Position Sizing: Key to Maximizing Returns

In a time when market volatility and equity preservation is of utmost importance, determining the correct number of shares to buy, or “position sizing”, is key to maximizing returns and minimizing risk.

The common investor generally doesn’t spend much time thinking about how many shares to buy or how significant of a position to take.  Instead, most investors use a common methodology of trading the same number of shares each time, which usually translates to a specific dollar amount.  Other, more sophisticated investors, opt to allocate a certain percentage of their portfolio value to a specific position. Following this train of thought, a new position in a portfolio of $100,000 would transcribe either a $10,000, or 10%, investment or a usual position of 50 shares.

Although these methods may work for some, using the volatility of a specific portfolio is likely to be the most effective decision tool.  Measuring a portfolio’s overall volatility enables an investor to decide on what percentage of that portfolio he is willing to risk losing on the new position.  This methodology is better explained through the following example. Read More…

Three ETFs To Play Emerging Market Debt

As developing nations continue to draw investor attention, opportunities in developing market debt may present a viable opportunity.

To not much surprise, many have been turning to developing nations mainly due to their aggregate, or combined, size and expected exponential growth compared to the United States in the near future.   In fact, a recent study indicates that 97% of the world’s population, 75% of its economic production and nearly 67% of stock market capitalization is outside of the United States. Read More…

5 ETFs To Watch As China Grows

Despite a series of tightening monetary measures in 2010, China’s economy grew by an astonishing 9.8 percent in the fourth quarter pushing it ahead of Japan as the world’s second largest economy, while fueling concerns that more needs to be done to fight inflation.

According to Aaron Back and Jason Dean at the Wall Street Journal, China’s economy grew at an annual pace of 10.3 percent in 2010, crushing its 9.2 percent growth in the prior year.  Furthermore, China reported a 31 percent increase in exports and a 38 percent increase in imports as the Chinese economy demanded more raw materials, machinery and consumer goods from producers around the world.  Read More…

Three ETFs Potentially Impacted By Floods In Brazil

Brazil is currently suffering from of one its worst ever natural disasters after extensive rainfall and flooding has caused massive mudslides and killed many people, potentially having an impact on production of coffee and sugar in Latin America’s largest economy.

According to BBC News, harsh storms in the nation dumped the equivalent of one month’s rainfall in just a few hours on Wednesday, sending mudslides ragging through towns, destroying homes, roads, and bridges, while taking out power and telephone lines.  Worst of all, municipal offices in the Serrana region, just north of Rio de Janeiro, have reported that death tolls as a result of the mudslides have surpassed the 500 mark and continue to grow.  Read More…

Hungary ETFs Face Uphill Battle

Recently, credit rating agency Fitch downgraded Hungary’s foreign currency credit rating to just above junk status, fueling concerns of the overall health of the nation’s economy and what lies ahead.

Fitch stated that a primary driver behind its downgrade was due to a “material worsening in the underlying medium-term budget position”.  This downgrade came shortly after the Hungarian parliament passed its 2011 budget.  The new budget is expected to run a little leaner than in previous years resulting in an expected cut to the nation’s deficit to 2.9 percent of debt in the next year.  As a result of these belt tightening measures, Fitch further added that it expects Hungary’s overall output to decrease by nearly 4 percent of GDP in the coming year.  Read More…

9 ETFs To Play Currency Debasement

As developing nations continue to implement loose monetary policies, keep interest rates low and boost money supply, a nation’s debt and currency debasement should me of much concern. 

Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years.  Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%.  During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy.  Similar trends have been seen in Europe, in particularly Greece, Spain and Portugal.

Some concerns of this exponential growth in debt include hyperinflation, as a result of printing more currency, a decline in the value of a nation’s currency, better known as currency debasement, and increased costs of borrowing, which make it difficult to chip away at deficits. Read More…

4 ETFs Impacted By China’s Bank Reserve Requirements

In an attempt to ease concerns and fears that rising inflation could damper economic growth, China raised bank reserve requirements for the third time in the last five weeks, influencing the Global X Financials ETF (CHIX), the iShares FTSE/Xinhua China 25 Index Fund (FXI), the SPDR S&P China ETF (GXC) and the Guggenheim China All-Cap ETF (YAO). 

The Chinese Central Bank raised the reserve requirement ratio by 50 basis points after earlier data showed a rise in property prices for a third straight month, an increase in both exports and imports, significant increases in M2 money supply and jumps in new lending by financial institutions despite government efforts to stem the flood of liquidity into the nation’s economy.  Read More…

Four ETFs Impacted By Russia’s World Cup Victory

Russia recently won the right to host the 2018 World Cup, one of the world’s largest sporting events, which is expected to boost the nation’s economy and provide positive price support to the Market Vectors Russia ETF (RSX), the SPDR S&P Russia (RBL), the iShares MSCI Russia Capped Index (ERUS) and the SPDR S&P BRIC 40 (BIK).

In preparation for the event, Russia is expected to significantly ramp up infrastructure spending over the next few years.  It is expected that the Kremlin will construct 13 new stadiums and renovate three existing ones to host matches.  Furthermore, the emerging nation is committed to improve and upgrade its airports and other transportation arteries, like roadways, to accommodate increased capacity and usage.  Read More…

Four Reasons To Watch Indonesia ETFs

As emerging Asia continues to remain at the forefront of economic growth, Indonesia has positioned itself in a place to become a global economic powerhouse which would likely benefit the Market Vectors Indonesia Index ETF (IDX) and the iShares MSCI Indonesia Investable Market Index Fund (EIDO).

One reason Indonesia is positioned to fare well in the near term future is its relationship with China.  With its close proximity to the world’s second largest economy, Indonesia has bloomed to be China’s third largest trading partner which has enabled the nation’s GDP to grow and attract foreign investors and is expected to continue to reap these benefits as China continues to grow.  In fact, the International Monetary Fund expects Indonesia to grow nearly 7 percent in the coming year.  Read More…

Four ETFs To Watch As China Fights Inflation

As inflationary concerns continue to loom in China, the nation’s government is making moves to curb to fight this rise in prices, which could potentially influence the iShares FTSE/Xinhua China 25 Index Fund (FXI), the Global X China Financials ETF (CHIX), the SPDR S&P China ETF (GXC) and the Claymore/AlphaShares China All-Cap ETF (YAO).

In the month of October, the consumer price index in the world’s second largest economy rose to 4.4 percent year over year driven primarily by a 10.1 percent rise in food prices.  This increase in prices has resulted from an influx of money supply in the Chinese economy due to the nation’s expansionary monetary policies which enabled its banks to increase lending.  Read More…

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