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Emerging Markets Are on a Tear

Regular readers of this letter know that I have been going on about emerging markets like a broken record (as my kids ask “What’s a record?”). My favorite investment targets have been on an absolute tear lately. In July, Poland (NYSEARCA:EPOL), (click here for “Where to Play the Dead Cat Bounce in Europe” ) soared by 25%, Chile (BATS:ECH) rocketed by 17% (click here for “Chile is Looking Hot”), Singapore popped 13% (click here for “Singapore Sizzles”), and Indonesia jumped 11% (click here for that call). Portfolio managers are voting with their feet, unsurprisingly choosing to invest in the portion of the global economy that will account for 90% of growth for the next decade, and giving a cold shoulder to the home market that will only provide 10%. They are capturing a double whammy in that appreciating currencies and rising share prices create a leveraged, hockey stick effect on trading profits. If you want to run with the bulls, make sure your passport is current.