Totally totally OT: BRIC

G7 Leading Economic Indicators are in free fall.

Emerging Markets Leading Economic Indicators remain quite strong. Estimates suggest emerging market GDP growth may decline from around 8% this year to "only" 4% next year.

G7 GDP growth is likely to be only about 1% or 2% next year.

Although emerging markets have, indeed, gotten much of their growth from exports to the developed nations, they are increasingly trading amongst themselves and their growing middle class is resulting in an increasingly dynamic internal market as well.

From a valuation perspective their average price-to-cash flow ratio has tumbled from about 12.0 X to 7.5 X. Although they will clearly feel the effect of a slowing developing world, the will continue to benefit from soaring gains in productivity. We may continue to have a sloppy market in emerging market shares but they have a strong chance of becoming the next bubble over the next three-to-five years.

G7 Leading Economic Indicators are in free fall.

Emerging Markets Leading Economic Indicators remain quite strong. Estimates suggest emerging market GDP growth may decline from around 8% this year to "only" 4% next year.

G7 GDP growth is likely to be only about 1% or 2% next year.

Although emerging markets have, indeed, gotten much of their growth from exports to the developed nations, they are increasingly trading amongst themselves and their growing middle class is resulting in an increasingly dynamic internal market as well.

From a valuation perspective their average price-to-cash flow ratio has tumbled from about 12.0 X to 7.5 X. Although they will clearly feel the effect of a slowing developing world, the will continue to benefit from soaring gains in productivity. We may continue to have a sloppy market in emerging market shares but they have a strong chance of becoming the next bubble over the next three-to-five years.

Sorry for repeat.

Penultimate sentence should read, "...of a slowing developed world..."

No, alanhart, BRIC was and always is strong. It collapsed not because of fundamentals, but because of perceived risk. I was heavily invested and doing just fine until the Lehman collapse, when things started moving too fast for me to react. I made a temporary investment into 2x short until the government announced its rescue plan, and I switched out immediately. I took my losses from the Lehman fiasco and have now reinvested in Brazil and China in particular - I have tax losses that will offset any gains for some time to come, and China has said its intention is to reflate its stock market, down 64% since October. When a Communist country says it's going to reflate its stock market, guess what it's going to do?

I'm in 2x China bull. Brazil just the MS index fund for now, till I see a clearer direction.

China is retooling and ramping up production again, after the cool-off from the Olympics, which is what caused commodity prices to drop. Brazil - mistakenly - is traded like a commodities play, even though it has organic growth of 6.1% and contained inflation. China's growth is 9% with contained inflation.

Alanhart: I have no idea at all what India does . . .

One of the big advantages of India over China is that virtually all of the educated people speak English. I work for IBM and India is now our largest overseas subsidiary with over 60 K employees. Call centers are an important part of this. But there is also a steady migration up the food chain. As such, India is playing an increasingly important role in software development. Many Indians are very well educated, ambitious and highly motivated. But they work for a fraction of what their U.S. colleagues are paid.

This is not to suggest that the Chinese will long be stuck doing low-skill manufacturing work. A few years they bought out Thinkpad laptop business. They too have every intention of moving steadily up the food chain.

I buy the total emerging market asset class through Vanguard. Their index fund has the lowest possible expense ratio of only 0.37% (albeit with a modest 0.25% purchase and redemption fee paid to existing shareholders)and their ETF index fund has an expense ratio of only 0.25%. For the frugal, the very best deal out there. And the volatility (risk) of the fund is a small fraction of individual country funds. I prefer broader diversifcation when it comes to emerging markets and do not ascribe anything particularly special about so-called BRIC status. (A somewhat artifical invention of the nice folk at Goldman.)

Thanks, Steve & Topper.

My man Jim Jubak has an expectation that's the polar opposite of my question: Rather than ask if China's economy can survive the West's financial/economic crisis, he projects that it can help (slowly) stabilize and turn around the situation for the West by stabilizing its own markets . . .

Cure for crisis: Chinese medicine?

http://articles.moneycentral.msn.com/Investing/JubaksJournal/cure-for-crisis-chinese-medicine.aspx