Global Bargain Hunting: The Investors Guide to Profits in Emerging Markets

A RANDOM WALK AROUND THE WORLD

With the same clarity and insight that made Burton Malkiel's enormously popular A Random Walk Down Wall Street an influential bestseller, Global Bargain Hunting shows nonprofessional investors how to reap investment profits from the tremendous economic growth potential of developing countries. Describing a variety of strategies, Malkiel and Mei show you how to significantly reduce investment risk and increase profit from an expected recovery in emerging markets. In this book you will find out:

* Why long-term investment is the key to financial success in emerging markets
* How to adjust asset allocation and risk exposure for a variety of life-cycle investment objectives (high growth, college expenses, retirement, etc.)
* Why low-cost, low-turnover index funds should be the core of a well-diversified international portfolio
* How emerging market bonds, real estate, and natural resource securities can help round out the portfolios of those with substantial assets
* The most up-to-date changes in the global financial landscape in a new introduction written especially for this edition

Introduction to the Paperback Edition: Recent Crises Present Historic Opportunities
Preface

PART I: THE RICHES TO BE REAPED

Chapter One:
Investment Opportunities Flourish Outside the Developed World

Experience from Recent Investors
Emerging Markets Around the World
Four Tigers: Hong Kong, South Korea, Singapore, and Taiwan
Three Tiger Cubs: Malaysia, Indonesia, and Thailand
One Dragon: China
One Elephant: India
The Flamingos: Latin America
And All the Rest: Eastern Europe and Africa
Consumer Markets in Emerging Nations

Chapter Two:
The Price Is Right on the Other Side

Stocks in Emerging Markets Are Bargains
The Home-Country Bias and the Likely Future Flows of Funds into Emerging Markets
Four Fundamental Reasons Why Rapid Growth Will Continue
Economic Freedom Is Everywhere
The People Are Smart and Thrifty
High Technology Has Already Arrived
The Financial Undergrowth Is Impressive
Could We Be Wrong?
Part I Highlights

PART II: THE DANGERS TO BE AVOIDED

Chapter Three:
Political Instability Can Sour Many an Investment Opportunity

Playing Russian Investment Roulette
Acting on the World Investment Stage
Survivorship Bias
The Mexican Roller Coaster
A Tale of Two Flies

Chapter Four:
Lawlessness Makes Emerging Markets a Dangerous Jungle

The Pervasiveness of Lawlessness
Con Artists Flourish in a World Without Legal Safeguards
MMM Meant Triple Misery for Russian Investors
Harshad Mehta: The Invisible Hand in the Indian Stock Market
Other Complications of Emerging-Market Investing

Chapter Five:
Volatility Guarantees a Bumpy Investment Ride

Taiwan Takes Its Ups and Downs
Happy Flying Crashes in China
The General Evidence on Emerging-Market Volatility
What Is a Global Bargain Hunter to Do?

Chapter Six:
How Diversification Can Reduce Risk

Diversification Provides Protection
Diversification in Theory
Diversification in Practice
The Gains from Global Diversification, 1985-1995
Further Gains from Adding Emerging Markets
Diversification in the Future
Playing the Home Team
Part II Highlights

PART III: HOW TO INVEST IN EMERGING MARKETS

Chapter Seven:
The Professionally Managed Approach

Types of Professionally Managed Funds
Paying Full Price and More for Open-End Funds
Finding Buried Treasure Among Closed-End Funds
Some General Rules for Buyers of Closed-End Funds
Choosing Particular Closed-End Funds
Taking Risks -- and Profits -- with Closed-End Funds Traded Abroad

Chapter Eight:
The Indexed, or Computer-Managed, Approach

The Case for Indexing
Constructing an Index: Some Important Issues
Evaluating the Efficiency of Emerging Markets
Indexing Wins Again
Available Index Instruments
The Vanguard Emerging Markets Index Fund
Other Index Products: World Equity Benchmark Securities (WEBS)

Chapter Nine:
The Self-Directed Approach: Actively Managing Your Emerging-Market Portfolio

Pitfalls of the Self-Directed Approach
Gearing Up
Seven Investment Tips
Tip 1: Look at Regions, Not Companies
Tip 2: Use Price-Earnings Ratios and Dividend Yields to Find Investment Bargains
Tip 3: Overweight Markets with Low Price-to-Book-Value Ratios
Tip 4: Watch Out for False Bargains
Tip 5: Pick Countries Where Political Risk Is Subsiding
Tip 6: Trade as Little as Possible
Tip 7: Prune Your Hedges Severely
Some Final Advice

Chapter Ten:
Bargains in Bonds, Real Estate, and Natural Resources

Emerging-Market Debt
The Case for Investing in Emerging-Market Debt
How to Evaluate Emerging-Market Debt
How to Invest in Emerging-Market Bonds
Emerging-Market Real Estate
The Case for Investing in Emerging-Market Real Estate
The Case Against Emerging-Market Real Estate
How to Invest in Emerging-Market Real Estate
Other Investment Opportunities

Chapter Eleven:
Investment Strategies and Specific Recommendations

General Investment Rules
Rule 1: Stay Cool
Rule 2: Diversify Broadly
Rule 3: Check Out Investment Bargains
Rule 4: Buy and Hold
Creating an Age-appropriate Portfolio
A Final Word
Part III Highlights
References
Acknowledgments