The Non-Dollar Report View in browser Tuesday, September 22, 2015 The Lazy Man's Way to Riches If you can set aside seven minutes each week, this gentleman will show you how you can bring home $121,139. You will not work from home. You will not sit in front of your computer for hours. You will not have to do any actual "work" at all! Watch, live on camera, as he shows you how to bring home $121,139... with just minutes a week. It's all right here... Eric Fry, noticing that emerging market stocks sometimes submerge, reports... Regular readers of The Non-Dollar Report may recall that we recently shared a few kind words for emerging market stocks. Today, Alex Green, the insightful Chief Investment Strategist of The Oxford Club, shares a few more kind words for this out-of-favor asset class. "Hard to believe," Alex observes, "but you can buy most emerging market stocks today at valuations that are nearly as low as what they reached during the 2008 financial crisis. So if you're kicking yourself about not buying back then - or not buying enough - here is your chance at redemption." Emerging market stocks are certainly cheap... or at least cheaper than they have been in several years. As we pointed out a few weeks back, "The MSCI Emerging Markets Index has gone absolutely nowhere for the last six years - a time frame during which the S&P 500 Index has doubled. As a result of these divergent fates, the valuation of emerging market stocks relative to U.S. stocks is near the lowest levels of the last six years." Obviously, emerging market stocks could continue to fall and, in the process of falling, become even cheaper relative to U.S. stocks. But Alex believes emerging market stocks have become a solid "Buy." He explains his thinking below... One Asset Class That's Too Cheap to Pass Up by Alexander Green Every once in a while, an investor with fresh money to invest should pause and ask an important question: "What asset class can I buy that is unquestionably cheap?" All asset classes move in cycles. Unfortunately, most investors don't give a hoot about the assets that are out of favor. They imagine that whatever is down is likely to stay down. And sometimes those assets do. But not forever. Just as every dog has its day, every asset class has its bull market. So when you find one that is unquestionably cheap, you need only buy... and show a little patience. What asset class is on the bargain-basement table today? Emerging markets. Hard to believe, but you can buy most emerging market stocks today at valuations that are nearly as low as what they reached during the 2008 financial crisis. So if you're kicking yourself for not buying back then - or not buying enough - here is your chance at redemption. Even after the recent sell-off in the market, U.S. stocks are trading at roughly 17 times trailing earnings. The average emerging market stock sells for just 10 times trailing earnings. Put another way, U.S. equities are 70% more expensive than emerging market equities. Yet mutual fund cash flow figures show that American investors are dumping emerging market stocks en masse, not buying them. They are making the classic mistake, selling what's cheap to buy what's expensive. Why are they selling? One reason is that emerging markets have been poor performers. The iShares MSCI Emerging Markets ETF (NYSE: EEM) is down over the last one-, two-, three-, four- and five-year periods... as well as down 13% year-to-date. That's pretty grim. Ironically, now that these assets are breathtakingly cheap, investors have had enough of them. (Sound familiar?) Why have emerging markets fallen? For several reasons. One is that many of them are commodity-oriented. As the prices of natural resources have fallen, so have these countries' economic prospects. China's slowdown is another factor. As the world's great manufacturing engine, that country is a huge buyer of exports from emerging markets. So when China sneezes, these countries can get the flu. But understand, these factors are fully priced into emerging market stocks. No one is going to sell emerging markets tomorrow because of China's slowing growth. And there are reasons for optimism. A lot of these larger economies - especially Brazil and India - are now relying on local customers for growth, rather than on exports alone. Some other emerging markets actually benefit from sharply lower commodity prices. Manufacturers in South Korea and Taiwan, for example, import a lot of raw materials. Emerging markets are now safer in many ways too. Their banks are better capitalized than they were in the 1990s. Most major emerging market economies have floating, not fixed, exchange rates now. And more of their debt is denominated in local currency, rather than in U.S. dollars. This helps insulate them from a strong dollar. Emerging markets offer investors three big benefits: Demographics. Emerging markets contain three-quarters of the world's land mass and nearly 85% of the people. China and India alone make up nearly a third of the world's population. Stronger growth rates. If you were a businessman, where would you rather operate? In an economy growing at 2% a year or in one growing three times as fast? Diversification. Emerging markets do not move in lockstep with developed markets. When our markets zig, theirs often zag. That means your portfolio can generate higher returns with less volatility, which is the whole point of diversification. In general, I recommend that investors hold 10% of their portfolio in emerging markets stocks. Yet most investors own little of these assets - or none at all. Given the current cheap valuations, now would be a good time to remedy that. Good investing, Alex Green For The Non-Dollar Report *This article originally appeared in Investment U. Eric's Note: Alex Green, the Chief Investment Strategist of The Oxford Club, is a great investor. One of the reasons he's so good is that he's an agnostic. He admits he has no idea where the stock market is heading... and he also admits that he wastes no time worrying about it. Instead, he focuses on the factors that are knowable. He does his homework. He identifies great companies... and then waits for an opportunity to buy their shares at a good price. Value is the key. Alex has the patience to wait for those moments when the stocks of great companies are "on sale." That's the discipline that drives the success of his trading service The True Value Alert. 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