I think we are close to a long-term buying opportunity in this segment. I’m not ready to move just yet … but I want to start identifying specific investments. This will help us move quickly when the time is right. I’m especially interested in the biggest emerging economy: China.
Today I will show you how to make the most of an oversold trend change. At the same time, I’ll explain how it’s possible to profit from China’s renewed growth without actually buying Chinese stocks.
Get in BELOW the Ground Floor!
Some investors are more risk-tolerant than others. We always have to consider our individual circumstances. Buying at the bottom can bring huge rewards, but the bottom can also be lower than you thought.
Here are some emerging-market ETFs that have not yet received news of a turnaround for the group.
Ground-Floor ETFs Ready to Move Upstairs
If you want to take a risk and possibly beat the crowd, you have to go away from the crowd. That means looking for beaten-down assets no one else wants to buy.
Earlier this week I gave you a list of ETFs that already escaped from the basement. You might say they are on the ground floor, and ready to move upstairs.
Today we’ll see who is still “down there” by listing some emerging-market ETFs with the worst recent performance. These seven are definitely below ground level. If they’re through digging, they have nowhere to go but up!
I made this list by combining three negative data points.
- Three-month total return: Every name on the list dropped over the three months ending Sept. 16.
- YTD total return: The calendar year to date doesn’t look much better for these bottom-dwellers. Six show a double-digit pounding for 2013. The seventh, the Market Vectors Vietnam ETF (NYSEARCA:VNM), edged a slight 4.3% higher so far this year.
- Fund flow: Most investors are either avoiding or selling these ETFs. Five of the seven show net redemptions over the last three months. Taken together, investors pulled a net $269 million out of these ETFs in the last three months.
From a “contrarian” standpoint, the price weakness combined with the negative fund flow suggests the “weak hands” are out of these markets. In situations like this, even modestly encouraging events can create an impressive rebound.