Emerging Markets Review

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Last week I sent Purposeful Investing Course subscribers updates of the Keppler Asset Management’s Good Value Emerging Country Selection Strategies.  

Emerging markets provide an important source of growth potential in our portfolio.  In fact the best performing share in the portfolio has been the iShares MCSI Brazil Capped ETF.

The ETF has risen 145% since we put it in the portfolio four years ago.

brazil ETF

The chart of the iShares MCSI Brazil Capped ETF shows that though far more volatile, the Brazilian fund has over performed the S&P 500 Index almost continually for 20 years.

Keppler’s country selections strategies are the foundation of basis of the value based Portfolio of country ETFs that we invest in and track in the Purposeful Investing Course.

Here are the recent developments & outlook from Kepplers 8 page emerging country strategies report we sent to Pi subscribers.

In December, the MSCI Emerging Markets Total Return Index (ND) had its highest monthly return of the year. It gained 5.7%in local currencies, 7.5% in US dollars and 5.6% in euros. This brings the calendar-year return to 18.1%, 18.4% and 20.6% in local currencies, US dollars and euros, respectively.

The MSCI Emerging Markets Index with net dividends reinvested (December 1988=100) now stands at $1,715 and €1,684.

The euro climbed 1.8 percent to 1.1225 USD/EUR in December, thereby reducing its 2019 decline to 1.8% versus the US dollar.

Twenty-four markets advanced last month and one market declined. Thailand was unchanged.

The three best-performing markets in December were Argentina (+13.2%), Korea (+7.8%) and Brazil (+6.9%), while Poland (-0.6%), Thailand (unchanged) and the United Arab Emirates (+0.8 %) performed worst.

In 2019,twenty-one markets advanced and five markets declined.

The best-performing markets last year were Greece (+45.8%), Russia (+37.5%) and Taiwan (+33.0 %).

Argentina (-20.8 %), Chile (-10.0%) and Poland (-5.1%) performed worst.

Performance is in local currencies unless mentioned otherwise.

The Top Value Model Portfolio, which is based on the Top Value Strategy (December 1988 = 100) using national MSCI country indices as hypothetical investment vehicles,advanced 4.4%in local currencies, 7.4% in US dollars and 5.5 % in euros in December.  It now stands at $ 30,284 and € 29,740.

In 2019, the Top Value Strategy was up 15.6% in local currencies, 14.5 % in US dollars and 16.6% in euros.

There was no change in our country ratings this month. The Top Value Model Portfolio includes the twelve markets Brazil, Chile, China, Colombia, the Czech Republic, Korea,Malaysia, Mexico, Poland, Russia,Taiwan and Turkey at equal weights.

According to our analyses,an equally weighted combination of these most attractively valued markets offers the highest expectation of long-term risk-adjusted performance.

According to our analyses, the asset class Emerging Markets Equities is now undervalued by 24% compared to the MSCI World Index of the developed markets.

Moreover, the Emerging Markets Top Value Model Portfolio is undervalued by 21 % compared to the MSCI Emerging Markets (Standard) Index, by 40% compared to the MSCI World Index and by a whopping 54% compared to the MSCI EM Growth Index.

This makes Emerging Markets Value one of the most attractive asset classes among global equities.

Michael Keppler New York,

January 3, 2020

P.S. Due to liquidity issues and geopolitical risks, we are assigning lower than equal weights to smaller markets in the portfolios we advise.

Coronavirus and the Stock Market Round One is Done

Coronavirus and the stock market.  Round Two is coming.

This virus and the market faced off in the spring.  The market won.  As the chart below shows, after a huge March 2020 collapse, by early June, the DJIA was back to its December 2019 level.

stock chart

The market’s back up, but history suggests that we’ll see volatility in the ten years ahead.

Here is a chart of the Dow Jones Index for the past three decades.  The .dotcom bubble burst just before the beginning of the 2000 decade.


The market then went nowhere from 2000 to 2014.   Finally it started reaching new high levels.

Such decades long sideways movement after a severe correction is nothing new in the stock market.

So everything’s in order… except the pandemic.  The ravages of the coronavirus dramatically increase the unknown and this uncertainty is the greatest purveyor  of weakness that a stock market can have.

How do we maximize the return on your savings and investments during this extremely dangerous time?

For the past four and a half years, my strategy, to protect against the next stock market crash and yet gain income and appreciation from rising share prices is to invest in an equally weighted portfolio of the value based country ETFs.

We track 46 stock markets around the world in our Purposeful Investing Course to determine which markets offer the best value so we can be in a perfect position to take advantage of stock market corrections all over the world.

Since no one knows what the future will bring, investing in value makes the most long term sense.

Our Purposeful Investing Course (Pi) teaches an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

Sticking to math based stock market value and country ETFs eliminates the need for hours of research aimed at picking specific shares.   Investing in an index is like investing in all the major shares of the market.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pi portfolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.  Now I am updating my plan to decide when it’s best to invest more.

70% is diversified into developed markets: Austria, Canada, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

The ETFs provide incredible diversification for safety.  For example, the iShares MSCI  Japan (symbol EWJ) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Japan Index which is composed mainly of large cap and small cap stocks traded primarily on the Tokyo Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Japan so an investment in the ETF is an investment in hundreds of different Japanese shares.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for almost every market.

You can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

You also receive a 100+ page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

This year I will celebrate my 52nd anniversary of global investing and writing about global investing.  Our reports and seminars have helped readers have better lives, with less stress yet make fortunes during up and down markets for decades.  This information is invaluable to investors large and small because even small amounts can easily be invested in the good value shares we cover in our seminar.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

Time is your friend when you use a good value strategy.  The longer you can hold onto a well balanced good value portfolio, the better the odds of outstanding success.

A 45 year portfolio study shows that holding a diversified good value portfolio (based on a  good value strategy) for 13 month’s time, increases the probability of out performance to 70%.  However those who can hold the portfolio for five years gain a 88% probability of beating the bellwether in the market and after ten years the probability increases to 97.5%.

Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $299, but during the pandemic to introduce you to this online course  I am knocking $124.50 off the subscription.


Enroll in Pi.  Get the basic training, the 46 market value report and access to all the updates of the past two years.

I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free, easy, diversified investing.

If you are not totally happy, simply let me know in the first two months for a full no fuss full refund.

You have nothing to lose except the fear.   You gain the ultimate form of financial security as you reduce risk and increase profit potential. 

Due to the COVID-19 pandemic we have cut the subscription to $174.50.  You save $124.50!

Then because this global recovery is going to take years, we’ll maintain your subscription at just $99 a year rather than $299.  Your subscription will be autorenewed in 2021 at $99, though you can cancel at any time.

Click here to subscribe to Pi at the discounted rate of $174.50

Subscribe to Pi today and you get a year’s subscription to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.