In the 19th century, there was a common expression used to describe the early intrepid explorers of the American West. They were said to be “seeing the elephant” – that is, they were seeing “all that could be seen.”
On Wall Street today, brokers looking for 10-bagger stocks, and portfolio managers seeking big gains, are similarly said to be “hunting for elephants.”
In the 21st century, the best chance of finding these elephants is by looking for them in emerging and frontier markets.
These markets have growth that may be up to three times that of America and Europe, which is fueled by a young, vibrant consumer class, as well as some of the world’s most fascinating cultures, nature, and landmarks.
One great New Year’s resolution for you would be to see the elephants with your own eyes this year. I can assure you that you’ll learn a lot, have great fun, and uncover some big opportunities that you would otherwise miss sitting in your living room.
Investing With the Big Shots
I’ve been fortunate enough to have on-the-ground experience in many of these markets, particularly in Asia and Latin America.
Last year I teamed up with Global Frontiers, which organizes and leads institutional research trips in these dynamic markets. On these trips we meet with the insiders and heavy hitters that help shape a country’s power structure, stock market, and foreign policy.
I’ve also developed friendships with a small circle of tycoons – sometimes referred to as “Taipans“ – a term which roughly translates to “big shots.”
If you meet and spend any time with such tycoons, a light bulb could go off in your head. You’re better educated and have much better circumstances compared to most new tycoons. So what gives them their edge? Why do they see opportunities that elude the rest of us?
The answer is, they think big and are very attentive to what’s happening on the ground in other countries and markets. They have great personal and professional networks that feed them valuable intelligence. Add a pinch of imagination, and a shot of courage, and you have a potential tycoon.
If you wish to become a Taipan, I suggest you look beyond China and India in the coming year to a story that’s being completely missed by even the most sophisticated investors.
Ten Southeast Asian nations will move ahead in 2016 as part of an ambitious, America-backed initiative to join their economies in a common market. The goal is to increase their common influence, form a counterweight to China, and boost prosperity for the region’s 622 million citizens.
These countries share more than geography. They have a young tech-savvy population with a rising middle class and booming consumer markets.
For example, Indonesian consumer spending has more than doubled in the last decade as it nears a $1 trillion economy. Singapore is already the world’s richest nation on a per capita basis. And Vietnam has the fastest-growing economy in the world and is projected to do even better this year.
There are country ETFs for almost all of these countries, but for one-stop shopping, consider the Global X Southeast Asia ETF (ASEA). This basket of 40 stocks was off 20% in 2015, giving you a nice value entry point.
If Asia is too far and too exotic for your tastes, visit Latin America. The Brazilian market has suffered both major losses and a plummeting currency, so your U.S. dollar will go far whether you spend it or invest it in Brazil.
I visited Panama last year and was astonished at the progress it’s made as a regional trade and financial center. Getting to see the project aimed at doubling the size of the Panama Canal made the trip worth-while.
Other ideas? The energy-driven iShares MSCI Colombia Capped ETF (ICOL) was down over 40% last year, while the iShares MSCI Mexico Capped ETF (EWW) held up extremely well on a relative basis, even as Mexico becomes a favorite base for global manufacturing. Mexican wages are now actually below those in China.
I encourage you to get going and see these opportunities for yourself. Then consider investing in a blend of these markets that are trading at bargain basement prices, and offer some of the best hedges on the U.S. dollar.
This is your opportunity – now go out and seize it.