(CNN) – Small emerging markets may pay off better in the long term than the lofty BRICS.
That’s according to State Street Global Advisors, which reports that smaller emerging market economies outperformed the BRICs by a whopping 39% in the period from 1996 to March, 2011.
Investors focusing only on Brazil, Russia, India and China may be missing out.
Compared with developed economies, the numbers are even more stunning.
For example, when you look at retail sales of licensed merchandise, emerging markets registered a 22.7% increase from 2009 to 2010.
“The Licensing Letter,” an independent trade publication, also reports a 2.2% decline in retail sales of licensed merchandise globally for the same period, and a 4% drop in the United States and Canada.
So while others shrink, the EM’s just keep growing.
Indonesia is just one of the small emerging markets cited in recent small emerging market reports; Its growing consumer class and economic growth have been the focus of special coverage on World Business today all this week.
Check out our coverage to locate the hot-spots.
Is it the bloodbath in your retirement savings, or the lost equity in your home that’s got you thinking? Or is it the seemingly constant news about investment professionals behaving badly (say, hosting lavish parties at foreclosed properties), or outright robbing their clients of billions of dollars (think, Bernard Madoff), that has you wondering how to protect what’s left of your nest egg?
For thousands of Americans, investment clubs are the answer. I’d been wondering how the clubs have been doing in this downturn, and how average investors have been faring against the big professionals, you know, the ones with beach properties now up for sale to pay for their crimes. So I visited an Atlanta-area club called “Mutual Investors of Atlanta,” to see what they’ve been up to.
This is a long way from the lavish boardrooms and offices of Wall Street. This group meets in the back room of a local grocery store once a month. Larry Reno, 62, started the club more than a quarter century ago. At the height of the financial crisis, the club’s portfolio was down by 50 percent. It slowly climbed with the market, and Reno now claims the group is ahead of big, professionally managed mutual funds. The club’s $100,000 portfolio is now down just a little more than 2 percent. Each club member expressed optimism about the future, and claimed they weren’t really terrified when things got bad. They had each other. I’m skeptical, but I’m also thinking, well, it’s better than the rest of us who were just afraid to look at our statements for six months!
The group is aggressively buying technology stocks and health services companies. This year’s run-up on the NASDAQ has been kind to their portfolio. At the meeting I attended, they opted to purchase more PetMeds stock. Most members are amateurs, but there are a couple of experienced investors on the team. They help the other members understand PE ratios, work software to track stocks, and keep emphasizing the need to buy solid companies, dump the losers without looking back, and look for solid business fundamentals, not the latest media darling.
The meeting was professionally run, with the minutes recorded and read, and with each investor reporting on an assigned stock-- indicating whether they believed, based on the research, that the stock was a buy, sell or hold. When one member drew a blank on “upside/downside ratios,” another club member was only too happy to explain what it meant (a ratio greater than 1 means more stocks are increasing in price than dropping). Does your broker do THAT? Or does she send you running for Investopedia.com to figure it out for yourself?
“Mutual Investors of Atlanta” is part of the Better Investing group, a national organization that sponsors educational programs, conferences, and promotes the idea that managing money as a group of equals, equals great results. Check them out at www.betterinvesting.org. If you like the idea of individual accountability, strength in numbers, and if you have a strong stomach to stay the course, this might be an investment approach for you.
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