Happy New Year’s Eve! We’re almost to a new decade.
Last week, I looked at how this century’s 20s is likely to be far different from the Roaring Twenties of last century.
Market valuations are stretched. They’re at nosebleed levels. By every practical measure relative to earnings or sales, stock valuations are near all-time maximum levels.
But not everywhere.
I shared a chart from GMO, the investment firm headed by famed investor Jeremy Grantham, that there’s nice returns expected to be had in emerging markets. According to GMO’s estimates, emerging markets will be the only place to earn positive inflation-adjusted returns over the next seven years.
Could Grantham Be Wrong?
Yes! He absolutely could be wrong. But the firm manages tens of billions of dollars and put its money where its mouth is.
I have been bullish on emerging markets recently, too.
As an asset class, they have way underperformed against the U.S. stock market in recent years. It’s not even close. In my mind, that underperformance spells opportunity.
It’s one thing to say that the 2020s will be nothing like the 1920s — up until the crash in late 1929. It’s another to put your money where your mouth is.
So, I’m going to ramp up my bets to emerging markets over the next decade.
In fact, I may ease off the pedal for U.S. investment all together. At the very least, I’m lighten up considerably.
Here’s how I’m going to do it.
I’ll be following my “30 Second Millionaire” strategy. It’s a simple strategy to follow; easy as making a peanut butter and jelly sandwich.
Whenever I have some extra cash laying around, or even a large portion of my regular savings, I buy a broad-based exchange traded fund (ETF). No individual stocks. Just an asset class.
It’s Time to Start Investing
It’s never been a better time to be an investor.
Years ago, it was virtually impossible to buy stocks in far away places like China, Vietnam, India, or Brazil.
Nowadays you can do it will a couple clicks of a mouse on your computer, or right from your smartphone.
Even better, the costs of buying ETFs has never been cheaper.
Most ETF providers are falling all over themselves to lower fees. Some of these broad-based investments can be had for 0.05% or less. That stands in stark contrast to the 3.00% or more it might cost to invest overseas 10 or 20 years ago.
With my strategy, I just buy here and there.
No market timing.
No valuation analysis.
No obsession about the news in any particular market.
Just buy ETFs here and there.
The market went up? Great.
The market went down? Even better.
What ends up happening is that consistent buying over time helps smooth out all the short-term hiccups in the market. The power of compounding works it magic on your wealth.
It helps to have an asset class that hasn’t gotten much love recently. That’s emerging markets in a nutshell.
So, for the next 10 years — and most likely even longer — I am going to apply the 30 Second Millionaire strategy in emerging markets to a part of my portfolio.
And if you want to start the decade off on the right foot, pick up a copy of my latest book: Unbounded Wealth.
There are several simple strategies like this one to amp up your wealth and break free of “The Man.” It’s an investment book you can really dig into, written in an easy-to-understand manner, with illustrations to help hit the point home.
Best of all, you can read it in two hours or less and learn everything you need to know about how to build a comfortable nest egg.
Happy New Year, and cheers to a great decade ahead!