With the exception of top corporate insiders and some deep-value institutional investors, almost no one has been buying mining shares or emerging-market stocks. There is a flood of articles from analysts about why these and related cyclical assets will continue to decline indefinitely. Then there are the few intelligent articles such as the following;
Why optimism is your worst investing enemy. Paul Farrell; Wall Street loves how easily it can manipulate you.
Emerging markets: Source of crash or rally? Michael Gayed “A reversal is just anything that’s a surprise. It’s a way of keeping the audience interested.”—Tony Gilroy
Emerging markets have experienced sharp currency declines, making their local wages much lower when measured in U.S. dollar terms. This phenomenon last happened in the first quarter of 2009 and greatly improved the profit margins for such companies, fueling dramatic rebounds in their share prices by January 2010.
Whenever emerging markets are in spotlight, Brazilian market (EWZ) and EEM tend to be among the most consistent winners. Large institutions are the most likely to consider Brazilian shares whenever they want to increase their position in to emerging-market equities because of their liquidity and historical consistency. Political unrest has contributed to the recent deep undervaluation of EWZ, along with investors shifting away from emerging markets into developed markets which will likely experience notable reversal during 2014.
The ideal buying situation is when almost all recent buyers are fresh participants and where the least knowledgeable investors have been the most likely to finally unload in disgust at recent days.