Additionally, some experts warn that the popularity overseas investments could end badly. Critics warn that emerging markets suffer from shortcomings that could prove fatal, such as high volatility, shortage of information on companies that issue shares, currency fluctuations that could magnify stock-price moves on portfolios measured in another currency and past booms have been followed by harsh busts. [Are ETFs creating an emerging market bubble?]
The good news, though, is that you can protect yourself by having a strategy. We get in when a position has crossed its 200-day moving average, and we sell when it drops below the 200-day or 8% off the recent high. Having an “escape hatch” that you employ at the right time will put a limit on your losses, remove emotions and mitigate your overall risk. [How to follow trends.]
For more information on emerging markets, visit our emerging markets category.
Max Chen contributed to this article.