This Colorful Table Shows Why You Should Diversify Your Emerging Markets Portfolio

This Colorful Table Shows Why You Should Diversify Your Emerging Markets Portfolio

Sam Ro | Mar. 7, 2013, 5:37 AM | 783 | 

If you’re lucky, then you might be able to pick the right stocks that’ll help you beat the major benchmarks.  But most investors who try to be stock pickers end up losing. The same goes for emerging market investors. This is why the best strategy may be to invest in a portfolio of countries rather than just one. Below you’ll find US Funds’ Periodic Table of Emerging Markets, which ranks the annual stock market returns for various emerging markets. “Emerging markets, like all investments, can have wide price fluctuations over time,” they write.  “This table shows the ebb and flow of emerging market countries over the past decade and illustrates the principal of mean reversion — the concept that returns eventually move back toward their mean or average.”

How Dollar Diplomacy Spelled Doom for the British Empire

How Dollar Diplomacy Spelled Doom for the British Empire

“The British Empire seems to be running off almost as fast as the American loan,” Winston Churchill thundered before the House of Commons on Dec. 20, 1946. “The haste is appalling.”

As if secretly synchronized, the pillars of empire and the international acceptability of the pound sterling were crumbling in tandem.

In late 1945, President Harry S. Truman’s administration had grudgingly agreed to provide the bankrupt U.K. with a $3.75 billion loan — but on the condition that the pound sterling be made fully convertible to dollars at the rate of $4.03 to the pound by July 15, 1947. This would allow Britain’s colonies and dominions to sell sterling for dollars, satisfying a long- standing demand of U.S. exporters and anti-imperialists while depleting the U.K.’s meager official reserves.

Now dollars hung over every question of how the empire would be dismantled. In February 1946, the great economist John Maynard Keynes had been full of foreboding about the British government’s inertial desire to “cut a dash in the world considerably above our means.” The country, he observed, was “not prepared to accept peacefully and wisely the fact that her position and her resources are not what they once were.” Read more of this post

Where Have China’s Workers Gone? China’s large pool of surplus labor has fueled its rapid industrial growth. Now this “demographic dividend” may be almost exhausted, and its economy reaching a Lewis turning point

Where Have China’s Workers Gone?

March 7 (Bloomberg) – Xi Jinping and Li Keqiang are taking over China’s leadership at a time when growth has slackened and labor issues have become more complex.

Reports that businesses such as Foxconn Technology Group are raising wages and struggling to recruit workers in China have intensified debate over just how many surplus workers the country still has. Meanwhile, a boom in college-educated Chinese has raised concerns of an impending threat to U.S. competitiveness. These seemingly disparate concerns about China’s labor force are actually linked by common underlying factors, with critical implications for China’s ability to remain the growth engine of the world.

China’s large pool of surplus labor has fueled its rapid industrial growth. Now this “demographic dividend” may be almost exhausted, and its economy reaching a Lewis turning point: a shift named after the Nobel prize-winning Arthur Lewis, who was the first to describe how poor economies can develop by transferring surplus labor from agriculture to the more productive industrial sector until the point when surplus labor disappears, wages begin to rise and growth slows. Read more of this post

China’s Richer-Than-Romney Lawmakers Show Xi’s Reform Challenge

China’s Richer-Than-Romney Lawmakers Show Xi’s Reform Challenge

The ranks of China’s ultra-wealthy in its legislature swelled 20 percent this year, highlighting the vested interests that may oppose any measures by incoming President Xi Jinping to reduce the nation’s wealth gap.

Ninety members of the National People’s Congress are on a list of China’s 1,000 richest people published by the Shanghai- based Hurun Report, up from 75 last year, according to a review of the data by Bloomberg News. Everyone on the Hurun list had a fortune of at least 1.8 billion yuan ($289.4 million), more than former Republican presidential candidate Mitt Romney.

The growing presence of wealthy people in the legislature coincides with efforts by Xi to stem corruption and the public display of luxury by officials as he seeks to address concern the Communist Party no longer represents interests of ordinary Chinese. Xi’s task may become more difficult as the rich move to cement their gains through legislation, said Yang Fengchun, an associate professor of government and management at Peking University.

“The National People’s Congress has a lot of rich businesspeople who have the knowledge and the means to make laws, and that’s a privilege the rest of society doesn’t have,” Yang said in a telephone interview. “The common people believe that they can’t protect the rights of the weak.” Read more of this post

China: Interest rate hikes ‘cannot be ruled out’

Interest rate hikes ‘cannot be ruled out’

Updated: 2013-03-07 09:51

By Wang Xiaotian ( China Daily)

Diverse measures could be used to help control inflation, says adviser Read more of this post

With Positions to Fill, Employers Wait for Perfection

March 6, 2013

With Positions to Fill, Employers Wait for Perfection

By CATHERINE RAMPELL

American employers have a variety of job vacancies, piles of cash and countless well-qualified candidates. But despite a slowly improving economy, many companies remain reluctant to actually hire, stringing job applicants along for weeks or months before they make a decision.

If they ever do.

The number of job openings has increased to levels not seen since the height of the financial crisis, but vacancies are staying unfilled much longer than they used to — an average of 23 business days today compared to a low of 15 in mid-2009, according to a new measure of Labor Department data by the economists Steven J. Davis, Jason Faberman and John Haltiwanger. Read more of this post

Internet rumors and xenophobia cost the world’s biggest instant noodle maker Tingyi/Master Kong $2.4 billion

Internet rumors and xenophobia cost the world’s biggest instant noodle maker $2.4 billion

By Gwynn Guilford — 4 hours ago

When most people think “ramen” they think Japan, but that association has landed Master Kong, the world’s biggest instant noodle maker, in a lot of hot water. The company, which is based in Taiwan and listed in Hong Kong, has lost some $2.4 billion in market capitalization after false rumors about its ownership circulated during Japan and China’s showdown over islands in the East China Sea. Japanese products and companies have been hit with damaging boycotts and protests since the crisis began last fall. That’s also when spurious rumors began circulating online that Master Kong’s parent company Tingyi was majority-owned by a Japanese company. Then a mass campaign encouraged a boycott  via internet and SMS, alleging that the Hong Kong-listed noodle-maker had donated ¥300 million to Japan’s purchase of the controversial islands, as reported by Chinese media blog Danwei, which also created this great chart: 

The smear campaign got its facts wrong—the Japanese instant food company Sanyo owns 33.18% of Tingyi, just behind Taiwan’s Ting Hsin, which owns 33.27%. And the company didn’t make any pledges to buy the islands for Japan. But the facts are little consolation to the company or its investors. Tingyi says the originator of what it calls “Japanese investment-gate” (link in Chinese) was its biggest competitor in the ramen market, Uni-President (which, for its part, denies involvement). But this just goes to show how volatile a mix of social media, misinformation, and xenophobia can be—even before you add the extra spicy packet.

Former Thai DPM and chief economic architect Somkid: “The country is like a Monet painting – nice to look at from a distance but just a blur at closer inspection”; Thailand may become a country without a future if its leaders continue to overlook visionary and sustainable development

Somkid scathing on ‘lip service’ of populist govt

JEERAPONG PRASERTPOLKRUNG
THE NATION March 7, 2013 1:00 am

Thailand may become a country without a future if its leaders continue to overlook visionary and sustainable development, Somkid Jatusripitak, a former deputy prime minister, said on Tuesday.

“The country is like a Monet painting – nice to look at from a distance but just a blur at closer inspection,” he said, referring to French impressionist Claude Monet, who died in 1926.

Somkid was a guest speaker at an event to mark the 58th anniversary of the Thai Journalists Association. On the surface, the Thai economy is at the forefront of Asean countries, he said. But underneath the apparent success story lurk worrisome trends that could lead to decay. Read more of this post

Cash levels in Brokerage accounts approach lowest levels in history! This is America, Now: The Dow Hits a Record High With Household Income at a Decade Low

Cash levels in Brokerage accounts approach lowest levels in history!

Posted by Chris Kimble on 03/02/2013 at 7:01 am; This entry is filed under Negative Net worth, S&P 500.

The awesome chart below was created by  Doug Short, reflecting that a “ton of cash has disappeared in investors pockets this past month!”

Negative Net Worth = “Free Credit Cash accounts (cash available to spend/invest quickly) minus Margin Debt.” The chart Doug put together reflects a rapid decline in available cash/net worth this past month. Read more of this post

Food for Thought: Why Auntie Anne’s Pretzels Failed in China

Food for Thought: Why Auntie Anne’s Pretzels Failed in China

Published : March 06, 2013 in Knowledge@Wharton

Growing up in Indiana and Washington, D.C., Taiwanese-born Wen-Szu Lin often felt torn between two cultures. When, as a young entrepreneur, he was presented with the opportunity to buy the Chinese franchise rights to Auntie Anne’s, his unique background began to feel like an advantage: Who better than a Chinese-American to sell an American product to Chinese consumers? That advantage didn’t carry the English-speaking, American-educated Lin as far as he thought it would. The China Twist: An Entrepreneur’s Cautious Tales of Franchising in China is the story of his journey. At a time when China’s global economic importance continues to grow, the book provides interesting insights into the challenges — the ones you might expect as well as those you don’t necessarily see coming — of launching a business in a dynamic and rapidly evolving consumer landscape. A year after graduating from Wharton with a degree in entrepreneurial management, Lin was working for a global strategy consulting firm. He enjoyed his job but had recently gotten engaged and was hoping for a position that would afford greater financial stability to his future family. As his academic focus might suggest, he wanted the opportunity to build a business of his own from the ground up. A franchise operation seemed like the perfect place to start, offering the best of both worlds: He would own the territory, but also have the advantage of a proven business model and a built-in support system.

Auntie Anne’s offered an enticing opportunity. Explaining the company’s background and the reasons for his enthusiasm about his entrepreneurial venture, Lin writes: “‘Anne’ of Auntie Anne’s Pretzels is Anne Beiler. In 1988, she began mixing, twisting and baking pretzels and a variety of snacks at a farmer’s market in Downingtown, Pa. One day, Anne and her husband Jonas ran out of raw ingredients to make their typical pretzels, so they used the materials they had left in their kitchen. The change in recipe caused their sales to soar. The pretzels sold so well that they decided to stop selling anything else. The recipe they discovered in 1988 is the same recipe sold today at more than a thousand stores in more than twenty countries….

“In the U.S., the stores became extremely popular in most malls and transportation hubs, so it was proven to make money. Another plus: somehow, the brand had taken on a very nostalgic, comforting feeling. Many consumers could often recall a personal experience with Auntie Anne’s. Few brands could claim this kind of emotional bond. More amazing was that Auntie Anne’s had never invested in any above-the-line advertising (that is, TV, radio, print media, etc.). Their marketing plan was simple: enthusiastic employees offering samples of piping hot pretzels to anyone walking within a few feet of the stores.”

Lin and his partner Joseph Sze believed this approach could potentially make pretzels a huge hit in China. So, with a few investors backing their plans, Lin and Sze acquired franchise rights to introduce Auntie Anne’s Pretzels in China and embarked on their venture in 2008. What followed were four harrowing years of red tape, headaches and cultural clashes. Read more of this post