US vs. Emerging Markets

2020년 4월 7일

The best-performing markets tend to flip flop every decade or so. For example, in 2000-2010, emerging markets outperformed US markets. In the following decade (2010-2020), US markets significantly outperformed and emerging underperformed. This concept is known as reversion to the mean - valuations get stretched in one direction, and eventually, it is bound to reverse to the historical mean.

If we use Total Market Cap/GDP a metric (warren buffet's favourite metric for valuing the entire stock market), and this concept of reversion to the mean to get exact numbers for expected returns, here is what we get:

Estimated Annualized Return (Next 10 Years, source: gurufocus.com)
United States: 1%
Emerging Markets: 23%

Estimated Total Market Cap to GDP (Current, source: gurufocus.com)
United States: 122%
Emerging Markets: 40%

Once this current recession/crash is over, I expect sideways movement and slow recovery for US stocks., vs. explosive growth for emerging markets similar to the 2000s.

TL;DR: US market bad. Emerging markets good

2020년 4월 7일

노트

medium.com/@kurt_cobain/emerging-markets-vs-the-us-what-is-a-better-investment-for-the-next-decade-9d0f2a749558