December 14, 2009

Emerging Markets

I am asked on occasion about investing in emerging markets.  While it is tempting to invest in markets such as China, India, Brazil, Korea etc, it is also quite risky.  Besides the obvious risk inherent to investing in companies in countries outside the US that have much less stringent reporting requirements, there is also a currency risk.

I tell people that when you invest in a broad based US index fund, see VTI, then you are already getting some international and emerging market exposure since the companies within such as Caterpillar, IBM, McDonald's, Exxon & GE are already investing in those countries.
Stay tuned.