Best ETFs for 2018: This Isn’t the Year for Emerging Markets (DVYE)

The following is an excerpt from Best ETFs for 2018: This Isn’t the Year for Emerging Markets (DVYE).

Well, I should probably start this by mentioning that I no longer personally own the ETF I recommended in InvestorPlace’s Best ETFs for 2018 contest.

I recently sold my shares of the iShares Emerging Markets Dividend ETF (DVYE). While I still believe that emerging markets are likely to be one of the best-performing asset classes of the next ten years, it’s a minefield in the short-term. As I write this, the shares are down 4% on the year. That’s not a disaster by any stretch, but it is a disappointment.

There are a couple reasons for the recent underperformance in emerging markets. To start, the U.S. market remains the casino of choice for most investors right now. Adding to this is dollar strength. While dollar strength is good for countries that sell manufactured products to the United States, it’s bad for commodities producers, as a more expensive dollar by definition means cheaper commodities.

President Donald Trump’s trade war isn’t helping either. While it’s hard to argue that anyone truly “wins” a trade war, Trump isn’t incorrect when it says that our trading partners need us more than we need them. In a war of attrition like this, you “win” by losing less.

Of course, these conditions are not new, and virtually all of them were in place when I made the initial recommendation of DVYE. None of these factors would be enough for me to punt on emerging markets just yet. No, the problem is a greater risk that has only recently popped up: the twin meltdowns in Argentina and Turkey.

To continue reading, please see Best ETFs for 2018: This Isn’t the Year for Emerging Markets (DVYE).

This article first appeared on Sizemore Insights as Best ETFs for 2018: This Isn’t the Year for Emerging Markets (DVYE)

Best Stocks for 2018: Enterprise Products Is a Keeper

The following is an excerpt from Best Stocks for 2018: Enterprise Products Is a Keeper.

A 14% return is nothing to be ashamed of in a year where the S&P 500 is up only 8%. Yet it looks awfully meager when my competition in the Best Stocks contest is up 144%.

As I write, my submission in InvestorPlace’s Best Stocks for 2018 contest — blue-chip natural gas and natural gas liquids pipeline operator Enterprise Products Partners (EPD)  — is up 14%, including dividends, as of today. Yet Tracey Ryniec’s Etsy (ETSY) is up a whopping 144%. Chipotle Mexican Grill (CMG) and Amazon.com (AMZN) take the second and third slots with returns to date of 71% and 68%, respectively.

So, barring something truly unexpected happening, it’s looking like victory may be out of sight this time around.

Can’t win ‘em all.

While Enterprise Products may finish the contest as a middling contender, I still consider it one of the absolute best stocks to own over the next two to three years. Growth stocks have dominated value stocks  since 2009, but that trend will not last forever. Value and income stocks will enjoy a nice run of outperformance — and when they do, Enterprise Products will be a major beneficiary.

To continue reading, please see Best Stocks for 2018: Enterprise Products Is a Keeper.

This article first appeared on Sizemore Insights as Best Stocks for 2018: Enterprise Products Is a Keeper

Emerging Markets Set to Take the Lead?

The following is an excerpt from Best ETFs for 2018: iShares Emerging Markets Dividend ETF Is Still in the Race.

If there is a dominant theme in the Best ETFs for 2018 contest, it would seem to be “Go America!” and specifically “Go American tech!”

The Market Vectors Semiconductor ETF (SMH) is leading the pack, up 7%, and four of the top five places are all held by ETFs specializing in tech or biotech.

But we still have a long way to go in 2018, and tech is starting to show signs of breaking down as we finish out the quarter. I expect my pick – the iShares Emerging Markets Dividend ETF (DVYE) to ultimately take the crown.

The U.S. market has been the undisputed winner of the post-2008 bull market. Since March 2009, the SPDR S&P 500 ETF (SPY) is up about 240%. The iShares MSCI EAFE ETF (EFA) and the iShares MSCI Emerging Markets ETF (EEM) — popular proxies for developed foreign markets and emerging markets, respectively — are up 111% and 142% over the same period.

But with that outperformance has come major overvaluation. The U.S. market is the most expensive major market in world based on the cyclically adjusted price/earnings ratio, or “CAPE” (only tiny Denmark and Ireland are more expensive). The U.S. market trades at a CAPE of 31 … which is the level it reached in late 1997, in the midst of the dot com bubble.

Meanwhile, emerging markets are downright cheap. As a sector, emerging markets trade at a CAPE of less than 18, and many individual countries are even cheaper. Brazil trades at a CAPE of 14, and Russia 7.

To continue reading, please see Best ETFs for 2018: iShares Emerging Markets Dividend ETF Is Still in the Race.

This article first appeared on Sizemore Insights as Emerging Markets Set to Take the Lead?