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Global Investing: Only 'Dead' for the Dumb Money
by: Graham Summers posted on: June 24, 2008 | about stocks: BIK / BKF / DIA / EEB / EPI / FXI / GXC / INP / PIN / SPY

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Have the tables turned?

Over the last seven years, emerging markets have trounced their US counterparts. Every year, a particular emerging market exploded upwards. In 2005, Zimbabwe’s stock market returned 1,600%. In 2006, Peru’s stock market rose 168%. And so on. Small wonder that the US placed 23rd out of 25 world markets for the period 2002-2006.

As the gains continued, institutional investors piled into emerging markets, pushing their indexes even higher. According to Howard Gold of the MoneyShow as much as $9 out of every $10 invested by US fund managers in 2006 went into international markets.

Like all investment manias, this one ended badly. The S&P 500 is now 15% off its October 2007 highs. In comparison, the most popular emerging markets—China and India—have fallen 50% and 30% respectively. In fact, nearly every emerging market you can think of —other than Brazil— is down more than the US in the last six months.

These losses have prompted many mainstream financial media outlets to question if investing in emerging markets will ever be a winning proposition again. The most blatant example was a Forbes article asking Is Global Investing Dead?

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