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Thought this may be of interest for some people here. Interesting to look to the past although I'm not going to be changing anything.
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Thought this may be of interest for some people here. Interesting to look to the past although I'm not going to be changing anything. -
I see equities outside the US grew by x215 over 110 years compared to x727 for US equities. I wonder if it might be the reverse for the next 110 years. -
Originally posted by ken1706 View Post
US will slow down
In 1910 the US was no where near the world power it is now. Most of the US rise in economic power was post WWII which means 1950-present.Comment
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Thanks, very helpful, gives me a boost since my USA equities are still disappointingComment
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Certainly possible.Originally posted by ken1706 View Post
I was surprised that more than a few countries had prolonged periods of negative stock market performance. This really underscores the importance of diversification.
Was also surprised that they predict China to become the biggest economy in just 10 years. China by many is still considered emerging.Comment
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I perused the article, but did not read all of it.
IMO the second poster missed the point and took the thread off the contents of the article.
More specifically, in the context of the already strong
growth in emerging markets and the rebuilding of developed
economies, they examine two issues – first, what kinds of return
and risk levels should we expect from emerging market equities
and, second, what the relationship between stock returns and
economic growth is. While emerging market equity returns in
2009 were spectacular, this analysis suggests that, throughout
history, emerging market returns have been closer to developed
markets than many investors would now expect. The crucial
issue is the extent to which emerging markets have undergone a
structural improvement in terms of their risk/return profile and
the levels of economic growth they now enjoyIn the 30 or so years since emerging market indices first
appeared, there have been few upgrades to developed status.
Apart from Israel and Korea, currently in transition, only Portugal
and Greece have advanced, and Greece is now on some watch
lists for downgrade. Indeed, more emerging markets have been
downgraded to frontier than have been upgraded to developed.
S&P’s downgrades include Argentina, Colombia, Jordan, Nigeria,
Pakistan, Sri Lanka, Venezuela and Zimbabwe. Clearly several
markets have failed to emerge as rapidly as once hoped.Although the term “emerging markets” dates back only to
the early 1980s, emerging markets are not new. Indeed, during
much of the nineteenth century, the United States would have
been regarded as a classic emerging market. The notion that
emerging status can largely be captured by a ranking of GDP
per capita allows us to revisit countries back in 1900 at the start
of the Yearbook coverage to see which stock markets existing
then might have been deemed emerging at that time.Emerging and frontier markets are far too big to ignore. They
account for more than 70% of the world’s population (over five
times that of developed markets), 46% of its land mass (twice
that of developed markets), and 31% of its GDP (almost half
that of developed markets). And, taken as a group, their real
GDP growth has been much faster than in developed markets.I could go on, but the article was not pointing out whether the US could continue its growth cycle, but pointing out how much emerging markets matter when creating a diversified portfolio.We should therefore expect a modestly higher return from
emerging markets. This higher return arises not from the spurious
growth argument, but from a financial argument as old as
time, namely that investors require higher returns for higher risk.Comment
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