Something came to Ted Bauman’s attention about one year ago. It was in an area that had been suffering from mismanagement, and the mismanagement had been going on for quite some time. In the middle of December, they were about to select new leaders for the country. Those who were going to be leaving had their own ideas, and the reformers who would be coming in had other plans. Ted Bauman thought that people would side with the reformers and that would lead to increasing prices for the outfit.
Ted Bauman’s prediction was correct. His investments have gained nearly 13 percent in approximately three weeks. During the same time period, the S&P only managed to gain a little more than 2.5 percent. Because of that win, he looked for similar situations over the past year, and he found several, but not many people took advantage of them.
Over the past year, if you followed this particular pattern, you would have gained 70 percent more than what was earned by the S&P 500, and Ted Bauman thinks that the same thing is poised to happen this year. Therefore, he purchased iShares MSCI South Africa ETF in the middle of December.
Ted Bauman was born in Washington, D.C. and raised in Maryland. He moved to South Africa and attended the University of Cape Town where he earned postgraduate degrees in Economics and History. In the 25 years that he has worked in this country, he held mainly executive positions in non-profit organizations. Most notably, he was a fund manager for low-cost housing projects. He took part in funding a charity called “Slum Dwellers International” that has aided more than 14 million people in 35 countries.
Ted Bauman’s country of origin has not been managed well for the past 10 years, and the party in charge chose a reformer to be the next president. The markets were in agreement, and he gained a lot of money because he was watching what the emerging market was doing, and he had a chance to get into it early. Ted suggests that you do the same thing this year. He believes that the EMs or emerging markets will prove to be one group that posts large wins this year.
On average, over the last 12 months, making these sorts of investments would have earned you a whopping 70% more than the S&P 500…#EmergingMarkets #stocks #stockmarket #investing #ETFs #etf #BanyanHill $EZA $IEMG $VWO $SPY $UUP $EEMhttps://t.co/YUglAw2J2Y
— Ted Bauman Guru (@Ted_B_Guru) January 8, 2018
Last year, EMs were seen as a sleeper hit, and the S&P 500 was up more than 20 percent. That led everyone to go after U.S. equity gains, and EMs increased by 37 percent. It appears that EMs are going to react in the same exact way in 2018. They might even do a little better.
It helped that the U.S. dollar annual performance rating was the worst that it had been in the past 14 years. Because of that, foreign-dominated EM stocks received a significant boost. An inverse relationship exists between the dollar and EM valuations.
The dollar wasn’t the only thing driving the markets. There was strong corporate earnings growth in EMs in 2017, and Ted Bauman doesn’t see any reason why that would end. As a matter of fact, experts believe that EMs will deliver more than 13 percent earnings growth, and many indicators suggest that the earnings growth of the EMs will mean that stock prices will also grow this year. In addition, EM exchange-traded funds or ETFs will grow as well.
The year 2017 was a strong one, but EM stocks are trading at 12.5 times estimated 12-month earnings. This translates to a 25 percent discount when they are compared to developed country stocks. In addition, EM stocks traded less than 12 times estimated 12-month earnings in the beginning of 2017. This means that the growth in valuations is expected to continue.
We must also consider the fact that EM equity cycles tend to go on for many years. EM ETFs registered an annualized 29 percent between the years 2002 and 2007, and 2017 is the beginning of a similar trend.
The Chinese market was rebounding in 2017, and this led to the excellent performance of the EMs, but other areas of the world are getting ready to do the same. Things look good in India, and the weakness that has been plaguing Brazil and South Africa that caused them to be under-bought is finally coming to an end. Therefore, EMs are looking like Ted Bauman’s South African ETF classic value plays.
It is great news that stock markets in the U.S. are at the highest levels they have ever been, but we aren’t likely to have 20 percent and higher gains. We haven’t necessarily reached the top, but the climb in that direction isn’t going as quickly as it has in the past, and that’s exactly what is supposed to happen.
The prediction is that U.S. index valuations will increase between 10 and 12 percent in the year 2018. It’s also likely that we could witness major increases in ETFs and EM equities. In 2017, these were on top of the U.S. market by 70 percent.
In the event that Ted Bauman is correct about what will occur with EMs and the financial analysts and big banks also correctly predict what will happen in the U.S. markets, choosing to invest in EMs could mean returns of 200 percent over the S&P 500!
You might have been out to lunch when the Great U.S. Bull Run occurred, but you can still join in on the second one that will be held offshore.
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