fyi from http://www.safehaven.com/article-4570.htm
note Marc's comments in last sentence!!
Read on:
"...
As we can see from figure 4, emerging economies were highly dependent on foreign capital in the late seventies and just prior to the Asian Crisis in 1997, but currently they are accumulating monetary reserves with their current account surpluses amounting to more than 3% of their GDP. As a result, my bet would be that emerging markets as an asset class may be less vulnerable than the US market should a sharp stock market correction unfold. I concede, however, that some emerging markets, which have experienced vertical price increases recently, are so over-extended that they could easily drop more than the US market, which has been an under-performer over the last 18 months. But, should such a sharp correction unfold, I would feel more comfortable to add to positions in emerging economies than in the US as I still maintain that over the next five to ten years emerging stock markets will outperform the US. As to the catalyst that will trigger the correction, I suppose that inflationary pressures may necessitate more additional interest rate increases than the market now expects. Therefore, rising interest rates and declining bond prices could at some point weight on all asset markets. But it does not really matter what the catalyst will be. When all asset markets are as extended as they are now it does not take much for a vicious sell-off to get underway. Still, I maintain that gold and other precious metals will continue to out-perform financial assets. Wherever, you may think the Dow will rise or decline my view is that we shall, eventually, be able to buy one Dow Jones Industrial Average with between just one and five ounces of gold (see figure 5).
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