Saturday, January 3, 2015

Wall Street Whitey's continued love affair with emerging markets

Oh and by the way:

US dollar denominated EM ETFs have gone utterly fucking NOWHERE since 2011.

OK fine, India had a good year this year, because Wall Street Whitey mistakenly thinks a Thatcherite can build a modern economy in India, where the majority of the population lives the same life they lived 2000 years ago.

But that pop this year only got your India investment back to where it was in early 2011. Wow your India pick sure sucks, Whitey!

And if you were broadly invested across EMs, that win in India would have been offset by the loss you'd have taken in Russia. Wow, you suck even more now.

Hey, don't get me wrong - I'd love it if the Piketty/Krugman/Summers "secular stagnation"/"oversupply of capital" story keeps worldwide rates and inflation artificially low while the unstoppable force of globalization continues to lift billions of people out of poverty, generating tremendous worldwide wealth and ushering in a new age of prosperity.*

But the past 4 years of market performance kinda makes that look like a pipe-dream, no?

If I were long EMs right now I'd be worrying that maybe they're about to do a cliff-dive the way Russia and oil already have. Expecting them to go up from here is sorta like fighting the last war, isn't it?

How did that work out for the short S&P crowd and the long inflation crowd and the long oil crowd and the long iron ore crowd? Did it work out well?

* - mostly because all those less-poor people will be buying more and more gold. So if you're investment thesis is still bullish EMs, Whitey, you'd better get good and long gold and prepare for a wild ride, no?

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