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These stories sometimes lead me to consider taking a speculative position in a fund with the idea of selling in a year or so after an easy profit. Just don't see that opportunity yet. Checking at Price, for example, I find these numbers. (1) PRMSX (EM Stock) YTD -14.21% & 1YR -4.15% ... (2) For PREMX (EM Bond) it shows YTD -9.5% & 1YR -4.37% ...(3) For PRELX (EM Bond Local Currency) the results are YTD -12.2% and 1YR -5.84%. Tough for those holding these funds. But if you've followed these markets a few decades you've observed multi-year drops of as much as 40-50% in both the currencies and equities. As a long term hold OK. But for a quick speculative play they don't appear very beaten up yet.
Related issue - Read good story yesterday (either Reuters or NYT ) about the human toll the sharp depreciation in currencies in these countries is taking. Costs of food, fuel and other necessities have sky-rocketed for those poor people to point of near starvation for some. So, while we whine about our portfolio losses, keep in mind the human suffering this is all causing in these countries.
Reply to @hank: Excellent points, especially in regards to the related issue. I think India is down to the point where someone could speculate if that was their interest (and maybe Indonesia, too.) EM broadly, maybe not there yet, although I think something like FEO trading at a nearly 14% discount to NAV is interesting.
Reply to @scott: Yikes - Getting too easy to download fund Prospectuses. PRMSX (EM Stock) lost 61% in 2008. (Thanks to David for the correction). OK - that was the Granddaddy of all market debacles and not to be taken as typical. Wish they went back more than 10 years because distinctly recall Sir John Templeton recommending EM equities to individual investors after they had fallen 50% in late 90s. These are markets not for the timid. Thanks for the thoughts Scott.
PRMSX made 85% in 2009 after losing 61% in 2008. The nature of asymmetrical returns is such that (down 61) plus (up 85) equals (down 27). That is, a $10,000 investment made at the start of 2008 and sold at the end of 2009 would be worth $7300.
Comments
Related issue - Read good story yesterday (either Reuters or NYT ) about the human toll the sharp depreciation in currencies in these countries is taking. Costs of food, fuel and other necessities have sky-rocketed for those poor people to point of near starvation for some. So, while we whine about our portfolio losses, keep in mind the human suffering this is all causing in these countries.
PRMSX made 85% in 2009 after losing 61% in 2008. The nature of asymmetrical returns is such that (down 61) plus (up 85) equals (down 27). That is, a $10,000 investment made at the start of 2008 and sold at the end of 2009 would be worth $7300.
David
Regards,
Ted