Friends, this week we welcome many new Over My Shoulder readers and also my new co-editor, longtime associate Patrick Watson. Together we're going to make this service even more valuable to you.
As part of that, these introductions will become more focused. The goal is to give you a quick summary of each item along with the key conclusions. I want you to have the main benefits even if you can't read the full story immediately.
Why You Should Read: Gavekal's Louis Gave shows how understanding emerging markets is critical in this volatile market.
- Emerging markets have historically been "high-beta" plays on developed markets - directionally similar but they rise more and fall harder.
- This year has been different. EM benchmarks are outperforming the S&P 500 with lower volatility.
- Sector weightings explain some of this. Emerging markets have less exposure to technology and more to energy. That's helpful when tech stocks are lagging and energy stocks gaining steam... as both are doing now.
Bottom line: With crude oil at prices not seen since 2014's big downturn, and tech stocks suffering from trade-related fears, Louis thinks overweight emerging markets and energy will be a good approach in an otherwise tricky 2018.
- John Mauldin