Emerging-market equities (EEM & EWZ) are often able to achieve dramatic gains even when U.S. equity indices have already begun what will eventually become a bear market, much like in 2007-2008, emerging market equities still usually decline on days when U.S. equities experience significant losses but not to the same degree. However, when they rebound it is much stronger than other funds. While there will periodically be important selling opportunities into over-optimism, it will be important to be patient and not to sell your emerging-market equity funds prematurely.
Now is a time to be invested in assets which historically perform best when we are in the transition phase from an extended bull market to a severe bear market, which are mostly investments which gain the most whenever inflationary expectations are rising.
Emerging-market ETFs will suffer additional outflows from those frightened by the Russia reports. However, they had already experienced large outflows in January and February 2014 which surpassed their entire outflows for all of 2013. If money is coming out of emerging markets, then even EWZ, Brazil Index ETF will be affected because it represents a relatively high percentage of most emerging-market fund portfolios.
In general, 2013 was all about extremes becoming even more extreme, while in 2014 we have been witnessing numerous price regressions toward the mean. Those assets near five-year lows such as commodities that have not yet begun to rebound will likely start soon. Other ETFs which are trading at or near all-time peaks, especially those which have been the most popular since early 2013 such as SPY, QQQ, IWM and junk bonds (JNK), are likely to experience the greatest declines. Nearly everything passes through its fair value level. It usually happens after the vast majority of investors have concluded that it is highly unlikely to happen.