Product Description

From Chile to China, Indonesia to India, developing countries around the world are experiencing enormous economic expansions—some that are several times greater than the growth rates of the West. In Global Bargain Hunting, bestselling financial writer Burton Malkiel and J. P. Mei, an expert in Asian emerging markets, provide ordinary investors with the information they need to profit from the explosive economic growth expected in developing countries in the coming years. Authoritative, comprehensive, and practical, this book covers the most exciting money-making investments of the 21st century—investments that nobody will want to miss or can afford to ignore.

High economic growth coupled with low-priced securities makes emerging markets the best investment bargain in the world. Moreover, these investments are likely to sustain their robust economic growth and provide their impressive return potential now and into the next century. The facts speak for themselves. While the U.S. stock market experienced compounded annual returns of 15.2% during the 1987-1996 period, the Hong Kong market returned 22.2%, Chile 29.6%, and Argentina 31.5%.

Global Bargain Hunting, distinguished by the same clarity and insight that characterized Malkiel's enormously popular and influential A Random Walk Down Wall Street, will help nonprofessional investors reap big profits from the tremendous economic growth of developing countries. Though emerging markets hold pitfalls for the unwary investor, Malkiel and Mei show you how to significantly reduce investment risk and dramatically increase returns. Describing a variety of strategies, from the safest and easiest methods to the most daring and complex investment techniques, this indispensable guide explains how to buy portfolios of discounted emerging market securities and how to beat professional money managers at their own game.

With their gift for making complex ideas accessible, Malkiel and Mei provide a complete overview of what makes emerging markets such a terrific investment bargain. They reveal the best hunting grounds for investors and explain the four powerful economic engines that will sustain the robust growth of these countries. Finally, you'll learn how to avoid the pitfalls that make some emerging markets a dangerous investment jungle—including political risks, market volatility, currency risks, high transaction costs, and lack of investor protection.

In today's ever-changing financial landscape, emerging markets have established themselves as one of the most exciting investment opportunities available. Comprehensive, practical, and accessible for the nonprofessional investor, Global Bargain Hunting, will pave the way to investment success for anybody seeking diversification and the opportunity for big profits.

Product Details

• Amazon Sales Rank: #879957 in Books
• Published on: 1998-01-06
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 240 pages

Review
Mark Mobius author of The Investor's Guide to Emerging Markets Global Bargain Hunting is an excellent guide for emerging market investors. The authors' extensive knowledge of financial history and their ability to explain it vividly give readers useful insights into the risks and opportunities arising from current developments.

About the Author
Burton Malkiel holds the Chemical Bank Chairman's Professorship at Princeton University, and is the author of A Random Walk Down Wall Street. He serves on the boards of several major corporations, including The Vanguard Group, an investment company with over $450 billion in assets. He is former president of the American Finance Association. He lives in Princeton, New Jersey.

Customer Reviews

A very good primer on EM
This is an interesting read, it presents a very bullish argument for investing in emerging markets based on the tremendous economic transformation that emerging markets are undergoing as a result of globalisation.

Overall this is a simple little book, not a particularly challenging read but worthwhile nonetheless. Its a very decent primer but doesn't seek to go into a huge amount of depth.

The author argues that index funds are overall the most effective way to gain exposure to EM, mainly on the basis of the high transaction costs and thin trading in emerging markets, which more than offset any potential gains that professional investors may make from stock picking and exploiting inefficiencies.

At the very least it does make a good argument for putting a proportion of your portfolio into emerging markets index funds and is a useful book to have in one's library, especially for financial advisors like myself who may find some of the passages in this book very quoteable and useful for explaining the asset class to clients.

Don't Listen to the Naysayers
This book was disparaged in several reviews. It is obvious the naysayers have an interest in the investing public avoiding index funds. They likely earn (used loosely) their living from the generation of fees. However, the record speaks for itself. Index funds beat the majority of actively managed funds a very high percentage of the time. The divergence is so great that active management of ones money should not even be considered by a thoughtful, prudent, odds appreciating investor. And the odds are the only thing that matters when investing money.

This book will convince the intelligent reader there really is no argument anymore. All one has to do is look at the performance gap between indexed funds and actively managed funds over the intermediate to long term. It is amazing that anyone would make an argument for actively managed mutual funds given the hard facts. Actually, not amazing, but merely self serving at the expense of others.

The emerging markets have recently awakened from a long slumber. Reading this book will help you understand the huge potential available overseas and the most efficient way to capture it.

Book Misleads
As is well articulated in the book "Global Bargain Hunting": A noted economist named Markowitz has shown it is both prudent and profitable to diversify globally. He demonstrated that some degree of global diversification actually decreases overall portfolio risk. It is possible to combine securities in such a way that higher returns and less risk are obtained. And while a tendency exists for "short periods of stress to spread globally", research does not reveal a long term trend of increased correlation among world markets.

The authors of this book then conclude advocating and clearly biasing index funds as the "simplest way in selecting emerging market shares". But Thaistocks.com disagrees.

An index fund is an open-ended mutual fund (or an institution) that buys for their investors a pure and only representative sample of common stocks available. The bigger the stock of a select market the more these funds own their shares. The actual number of different kind of listed firms are held to a bare minimum. This portfolio is then simply held with no attempt to trade from security to security or country to country. The passive investment nature of index funds minimizes transaction costs and taxes they tell us, all true enough.

Index funds have produced before tax, net returns on average two points higher than managed mutual funds, they inform us. Of course this was measured during the boom years prior to the Asian crises. Such large funds probably contributed to this crisis by increasingly paying irrational high stock valuations for pure liquidity and market capitalization, while ignoring rational valuations.

The authors concede that index funds tend to increase the weight of the countries whose stocks have recently performed well and so increases an investor's exposure to markets experiencing some kind of non sustaining speculative craze. But they stop short on telling us the real wake-up call to individual investors around the world! We much disagree with the key punch line of this book.

Index funds hold huge amounts of capital and are by any means very large investors when entering emerging markets. These funds by their very definition eliminate from possible ownership, all but the biggest shares in emerging markets. This has been our main point from the very beginning in April 1997: namely, index funds (and many other funds as well), are void of smaller often profitable and very undervalued and neglected export oriented, "value" shares.

Index funds ignore the very segment of the SET market that since 1997 has by far outperformed the local index as we have documented frequently at our site. Further, this "valuation inefficiency" over many years has lead to huge stock pricing distortions. This I have witnessed here with my very eyes over the past 10 years.

Fast growing smaller companies better think twice before listing on the Thai stock market as more often then not they get ignored by almost all institutions and traders alike. Hence they receive undeservingly so a huge valuation discount. Yet, from a rational individual investor's standpoint, it is "values and dividends galore" in Thailand's secondary export and niche market shares.

The authors again and again tell us, "Transaction costs in emerging markets are so large that they will offset any advantage an active manager may gain". This is a terribly misleading statement as in Thailand the buy and then sell trip on SET shares, is a touch above 1% and set to drop to only 0.6% later this year.

While the Authors Malkiel and Mei believe (and tell us so often) that index fund performance is superior performance, they tell us nothing about the forgotten deep values. The only qualifier is you cannot buy or sell large amounts of their shares quickly as they are illiquid. Illiquid, yes...but to whom? Institutional investors (like index funds) often have strict minimum investment mandates, which are in the millions of dollars worth (not Baht!), for each stock considered. More seasoned individual investors have a big advantage here over institutions.

Malkiel & Mei, "remain skeptical that anyone -even the pros-can, over the long run, beat the returns from an emerging market index or from a diversified portfolio of closed-end funds selling at substantial discounts." Perhaps they should come take a look at our work?

This book like so much other literature on this subject again and again fail to tell us the substantial and real advantages to individual investing.