Why Not Reduce Emerging Markets Now?

One benefit of your Purposeful Investing Course subscription are updates of the Keppler Asset Management’s Good Value Emerging Market Country Selection Strategies.  

The June 2020 updates shows one reason we should not abandon emerging markets. Currently they pay a higher dividend and have had the strongest appreciation this year.

stock markets

When I lived in Hong Kong, my apartment had views like this though the buildings were older and smaller at that time.

Moving to Hong Kong at age 21 was a real revelation to me.  I arrived n the late 1960s with the idea of selling US mutual funds to the Chinese, but ended up selling the idea of investing in Hong Kong shares to Americans.

That time in Asia broadened my horizons and led me to see the opening and rapid rise of emerging markets around the world.  We helped many thousands of readers get on that band wagon.  For many years emerging markets were the best investment of all.

Though Hong Kong is no longer considered an emerging market, we can gain some lessons from the Hong Kong stock market this last month, as China revoked the city’s special privileges as an autonomous entity.

The first lesson is to have global view.

At the end of May, 2020, the United States revoked Hong Kong’s special status under US law, opening the way for the city to be stripped of trading privileges, as Washington accused China of trampling on the territory’s autonomy. (1)

Yet the Hong Kong market rose 11% in June making it the best performing stock market in the world for the month of June 2020.  China was the second best performing market in the world with an uptick of 8.8%.

What’s up?

According to a Forbes.com article (2) President Donald Trump said he will revoke Hong Kong’s special status with the United States, including a reversal of tariff benefits and the potential for sanctions against Chinese and Hong Kong authorities in Hong Kong.

Trump said he would order his Administration to “revoke preferential treatment for Hong Kong as a special customs and travel territory from the rest of China” and asked said he was ask Treasury to sanction Chinese government and some Hong Kong officials directly or indirectly involved in the “eroding of Hong Kong’s freedoms. Our actions will be strong and meaningful.”

The iShares MSCI Hong Kong (EWH) (one of the holdings in the Pi portfolio) actually rose on the news.

It turns out that the restrictions may hurt US businesses more than it hurts China.

The problem is that if Hong Kong matches any U.S. trade action, U.S. exporters, especially when it comes to agricultural products,” may be hurt.

Hong Kong is the seventh-largest importer of U.S. agricultural products and over 1,300 companies have operations in Hong Kong. Foreign direct investment in Hong Kong totaled $82.5 billion in 2018. This is 1.4% of total U.S. foreign direct investment.

Damage to US business interests would likely be significant if restrictions are imposed. It could even be possible that U.S. banks have to withdraw from Hong Kong.

So lesson number two from Hong Kong is that though the US economy is still huge, it is no longer so supremely significant that it has to be involved from other economies to do just fine.

If the US becomes increasingly isolationist, US business may suffer as much or more than emerging nations.

Here are excerpts from the eight page July 2020 Keppler Asset Management emerging markets update  we recently sent Pi subscribers,

Recent Developments & Outlook

Keppler wrote: Emerging markets equities continued their recent uptrend, buoyed by strong worldwide monetary and fiscal stimulus.

China, South Africa (both up 8.8 %) and Brazil (+8.6 %) had the highest returns last month, while Greece (-3.7%), Russia (-1.2%) and Thailand (-0.8%) lost least.

Year-to-date, twenty-five markets are down—on average by 14.3%. China (+3.4%) was the only winning market year-to-date, while Greece (-39.2%), Colombia (-37.1%) and Peru (-29.1%) performed worst.

Performance is in local currencies unless mentioned otherwise.

There are two changes in our country ratings this month. Due to poor fundamental developments, Poland and Turkey were downgraded to “Neutral” from “Buy”.

The proceeds are reinvested in the remaining ten markets of the Top Value Model Portfolio: Brazil, Chile, China, Colombia, the Czech Republic, Korea, Malaysia, Mexico, Russia and Taiwan.

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

The following table shows how the Emerging Markets Top Value Model Portfolio compares to the MSCI Emerging Markets Index, the MSCI World Index and the MSCI EM Growth Index at the end of June 2020 based on selected valuation and return measures:

keppler 7 20202

According to our analyses, the asset class Emerging Markets Equities is now undervalued by 23 % compared to the MSCI World Index of the developed markets.Moreover, the Emerging Markets Top Value Model Portfolio is undervalued by 26% compared to the MSCI Emerging Markets (Standard) Index, by 43% compared to the MSCI World Index and by a whopping 62% 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, July 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.

Hong Kong had the highest growth in June 2020 and the next three best performing stock markets in the world this June 2020, were emerging markets.

In addition the Top Value Emerging Markets currently pay a higher average dividend yield (3.81%) than the developed markets (3.27%).  These dividends are much higher than what can be earned from US companies or AA rated bonds.

Our purposeful Investing Course (Pi) has a balance of 70% in developed markets and 30% in emerging markets.


Add Safety, Profit & Get Paid Double

The next four years will be a period of high overseas stock growth.

The chart below shows the last 26 years of real-time forecasting by the global equity analyst we track to make our portfolio decisions.

The analyst is Keppler Asset Management and the index they create The KAM Equally Weighted World Index is 15.4% below the value that the analyst forecast four years ago in September 2016.

The chart shows how in the past, two and a half decades there have been four opportunities (red Xs) when the entry levels in global markets were below or around the lower valuation band.  In the previous three low points like this, there has always been the highest growth and positive returns three to five years later.



So it’s good to know that if you invest in global stock markets overall, now, you’ll make capital gains over the next four or five years.

More importantly you get paid more income now!

Current markets have turned economic history upside down.  Normally bonds pay the highest interest rates and add safety to a portfolio.  Not in 2020.

This year equities have been paying a higher yield than bonds.

As of November 2020, according to Ycharts.com, (1)  AA bond yields are at 1.59%.



The US MSCI Index pays a modest 1.68% as of November 2020 .  That’s a terrible yield, but better than the 1.59% you can get in AA rated corporate bonds.

Just because US stocks pay more than dollar denominated bonds, does not mean they offer the best income deal.  In fact US shares pay one of the lousiest average yields of the 46 stock markets we, via Keppler, monitor around the world.

Eight solid, top value stock markets (shown below) not only add diversification and the best long term profit potential, they pay more than double the average US yield.  They pay  3.57% compared to the US yield of 1.68%.


This is why my core stock portfolio consists of a handful of top value share ETFs and this position has hardly changed in five years.

Let me explain why this strategy adds safety, increases long term appreciation potential and pays almost double short term income right now.

During the past five years, I have been steadily accumulating the same good value ETFs.  I have traded only five times, so my trading costs, my fuss, fiddle and time spent have been kept to an absolute minimum.

I have been investing in iShare country ETFs.  Each one invests in the MSCI Index of one of the top value markets above.

My strategy protects against stock market volatility and yet has potential for the best gains long term from rising share prices by holding an equally weighted portfolio of the best value based country ETFs.

The Purposeful Investing Course uses Keppler analytics to track 46 stock markets around the world into determine which markets offer the best value.

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

Plus Value ETFs are Safer

The people who dominate stock markets include a pack of thieves.  This fact has always been true.  We were recently reminded of this fact when Wirecard AG, one of Europe’s most prestigious companies, listed on Germany’s premier stock-market index, the Dax 30 fooled everyone including its top grade, longtime auditor, Ernst & Young GMBH.

The shares in German fintech company Wirecard AG (symbol WDI fell 63.74% as it filed for insolvency proceedings, after revealing that more than $2 billion in cash missing from its balance sheet was all a fraud.  The company’s market value fell to less than €500 million from almost €13 billion in a week.

Investors have seen this type of rip off again and again, really big scams from Enron to Bernie Madoff and these are just the tip of the iceberg.

Shares in stock markets are manipulated all the time.  Stock markets (in fact almost all types of markets) are led by sharks plain and simple.  Count on this fact.  This is the nature of the beast and the number one goal of many big businesses is to take as much of your money as they can to line their pockets.

In the Wirecard AG example many  thousands of investors have seen their hard work, their thrift, their security and hopes for the future disappear, even though they seemingly did everything right by investing in a blue chip, new era, high tech company.

A study of 92 years of investment returns shows that, despite the fraud and cheating and deceit, stock markets are still a good way to make your money grow… if you invest long term and diversify.


Our Purposeful Investing Course (Pi) strategy makes it harder for cheaters to grab your wealth because it’s very hard to manipulate an entire stock market, much less a dozen or so stock markets around the world.

Manipulators have a hard time tricking an entire market, especially larger markets.  If you get the best value country ETFs, your chances of long term profits improve.

Pi teaches an 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 iShare Country Index ETFs managed by Black Rock, Inc.

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.

My developed market portfolio has been diversified into eight developed markets: Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

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

The ETFs provide higher income and incredible diversification for safety, plus the highest long term profit potential.

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 most stock markets around the world.

Here’s how 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.  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 of all 46 markets.

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 the Pi course.

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 higher 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 to introduce you to this online, course that is based on real time investing, 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, plus all new updates over the next year.

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 from the pandemic 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.


(1) Ycharts.com corporate bond yields

(1) www.cnbc.com/2020/07/07/china-passes-national-security-law-on-hong-kong-but-creates-more-inflows.html

(2) www.forbes.com: trump-says-will-revoke-hong-kong-special-status-reviews-china