Is it time for exchange traded fund (ETF) investors to take a trip to emerging markets – or anywhere other than the United States for now?
While some stocks are beginning to stir and the markets have been up so far today, thanks to optimism about the Federal Reserve’s most recent rate cut, economists are still ready for a slowdown within the U.S. economy for the latter part of 2008.
The problems within the financial markets, in particular, are spreading into the broad stock market and are causing problems that will not go away overnight. One Moody’s economist says the United States is 100% in a recession.
If that’s the case, it could be time to seriously look elsewhere until this mess plays out.
Economists are favoring the long-term prospects of Brazil, China and India, reports Murray Coleman for Index Universe. China, in particular, has taken a real hit lately, but the prevailing sentiment is that it’s not going to be this way forever. Mexico is showing signs that it’s emerged from the U.S.’ shadow. Russia’s influence in Europe’s emerging markets should also be watched.
If you’re thinking emerging markets might be right for you, you’ve got many options once the funds move above their trend lines (200-day moving average):
- iShares MSCI Brazil Index (EWZ), down 4.6% year-to-date
- iShares MSCI Mexico Fund (EWW), down 3.1% year-to-date
- Market Vectors Russia (RSX), down 9.1% year-to-date
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.