EDITOR'S LETTERMerryn Somerset Webb
Invest where others won’t
Back in 2010 we thought about what might make good ‘trades of the decade’. Bill Bonner thought the most obvious way to preserve capital over the ten years until 2020 would be to sell Treasuries and buy Japanese equities. That was hard to disagree with. But thinking just about equity markets, I thought it might also be a good idea to sell one more thing that everyone loved and buy one that most people rather disliked. So, I suggested selling emerging markets in the East and buying developed markets in the West (alongside Japan).
This was such a nutty contrarian suggestion at the time that even Bill, the greatest in-house contrarian a contrarian magazine could hope for, said he wasn’t so sure it was a good idea. That may well turn out to be the case (2020 still being some time away and the world being a very uncertain place). But for now it’s going pretty well.
Some of the peripheral European markets haven’t had their best run ever, but the FTSE 100 is up about 15% since. The Dax has done 30%, the Nikkei 20%, and the S&P 500 more like 50%. Things haven’t gone so well in emerging markets. China is down 30%, Brazil is down 46%, and India has given up 25%. Recent days haven’t helped them out any either – Indonesia’s market lost 10% in two days alone earlier this week.
• Read the full editor’s letter here: Invest where others won’t