Since the mid 2000's emerging markets have become the ever more popular places to invest. This herd mentality (very strong in the financial world) has been driving up prices as more and more money continues to flow into places which many investors have only seen on a Google Maps search. Emerging markets (emphasis on Brazil here) are now more en vogue than ever as this recent Bloomberg article notes:
"Investors put $71.2 billion into emerging-market equity funds this year through Oct. 27, after a record $83 billion in net deposits during all of 2009, according to data from Cambridge, Massachusetts-based research firm EPFR Global.
U.S. stock funds, by contrast, suffered withdrawals of $55.5 billion through Oct. 27, EPFR data show."
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“Everyone and his dog are now overweight emerging equities,” Grantham wrote on the Boston firm’s website. He said investor enthusiasm could propel the stocks higher, even with the markets “fully priced.”
This article from Bloomberg has interestingly pointed out that some hedge fund's are finding better deals in the US. It's likely too soon for most to get out of emerging markets, because bubble or not it's going to grow for a while. But many of the easy bargains may be gone and it's time for investors to wisen up on the specific culture and politics of the places they are investing.
Interesting. I think there is a really stong herd mentality and it can really screw things up when all the hot money starts flowing the other direction. If you look at total world wide economic activity emerging markets are still under represented by investors generally (I think).
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