ringledman
Registered User
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- 620
There have been a number of discussions on here regarding asset allocation and in particular which countries to invest in.
It is still perceived within the western world that emerging markets are high risk and that the so called developed world is low risk.
Because of this conventional advisors and the conventional press will state that an allocation of 10% or so is enough in Asia and Brazil and a risky bet as such.
This is in my opinion is totally flawed for the New world in which we are living.
For any Long Term investor out there i.e. (10-20 years+) then you really need to turn the notion of risk on its head.
The developed world has many structural problems that will prevent it from creating real growth for a long time (i.e. a decade at least). Without real growth, asset prices in real terms (not nominal terms) will not increase.
Yes the dow may hit 20,000 or property double in price but if your currency or the currency of the country you have invested in falls fourfold due to inflation then in real terms you are much poorer.
For this reason we need to reassess what is risky.
Risky to me are the Western Markets of US, UK, Ireland, etc. due to overleverage, low growth, high consumption, high debt nations and becoming overly regulated.
Low risk to me are the new markets of China, Brazil, Malaysia, Taiwan, Singapore, India, Vietnam, HK. I would also add the commodity wealth nations of Canada, Norway, Australia to this list. Japan should also be added as a low risk for other reasons which are too lengthy to go into here.
On this basis we as investors need to totally reajust our portfolios. The Eastern markets are not just about growth but also about being less risky!
It is a hard concept to grasp and most of the developed world are too proud to admit that our wealth is falling and others are rising. We also can't see that our countries are becoming more regulated by appaling government intervention whilst these newer countries are becoming less regulated and more open.
I would recommend anyone here to view these 2 videos by Peter Schiff. 2 Hours of excellent independent advise -
http://www.youtube.com/watch?v=tU8jCa_dKTM
http://www.youtube.com/watch?v=6G3Qefbt0n4&feature=PlayList&p=10E5668909719CBA&index=0&playnext=1
The guy is a legend and everything he says is correct about how to readjust one's portfolio in order to avoid the problems the Western world will encounter over the next decade. We are not out of the woods economically yet. We have many structural problems to overcome and history shows that such adjustments take decades to fix.
Allocate your capital to the lower risk places in my opinion.
It is still perceived within the western world that emerging markets are high risk and that the so called developed world is low risk.
Because of this conventional advisors and the conventional press will state that an allocation of 10% or so is enough in Asia and Brazil and a risky bet as such.
This is in my opinion is totally flawed for the New world in which we are living.
For any Long Term investor out there i.e. (10-20 years+) then you really need to turn the notion of risk on its head.
The developed world has many structural problems that will prevent it from creating real growth for a long time (i.e. a decade at least). Without real growth, asset prices in real terms (not nominal terms) will not increase.
Yes the dow may hit 20,000 or property double in price but if your currency or the currency of the country you have invested in falls fourfold due to inflation then in real terms you are much poorer.
For this reason we need to reassess what is risky.
Risky to me are the Western Markets of US, UK, Ireland, etc. due to overleverage, low growth, high consumption, high debt nations and becoming overly regulated.
Low risk to me are the new markets of China, Brazil, Malaysia, Taiwan, Singapore, India, Vietnam, HK. I would also add the commodity wealth nations of Canada, Norway, Australia to this list. Japan should also be added as a low risk for other reasons which are too lengthy to go into here.
On this basis we as investors need to totally reajust our portfolios. The Eastern markets are not just about growth but also about being less risky!
It is a hard concept to grasp and most of the developed world are too proud to admit that our wealth is falling and others are rising. We also can't see that our countries are becoming more regulated by appaling government intervention whilst these newer countries are becoming less regulated and more open.
I would recommend anyone here to view these 2 videos by Peter Schiff. 2 Hours of excellent independent advise -
http://www.youtube.com/watch?v=tU8jCa_dKTM
http://www.youtube.com/watch?v=6G3Qefbt0n4&feature=PlayList&p=10E5668909719CBA&index=0&playnext=1
The guy is a legend and everything he says is correct about how to readjust one's portfolio in order to avoid the problems the Western world will encounter over the next decade. We are not out of the woods economically yet. We have many structural problems to overcome and history shows that such adjustments take decades to fix.
Allocate your capital to the lower risk places in my opinion.