By SIMON CONSTABLE
Over the past few years the world of emerging markets (EM) has mostly been world of hurt in the wake of the commodity market meltdown.
The question is whether that decline, which adversely affected many resource heavy economies, is over. Or put another way, if its true that "What goes up must come down," then can we rely on the reverse: "what goes down may rebound?"
The idea that it should work both ways is based on something called "mean reversion" in investing returns. If one investing sector, or asset class, has over performed for a while, we can expect that eventually it will underperform. Likewise, those sectors that underperform, like EM, shall eventually outperform. That's the idea anyway.
Charlie Bilello, director of research at Pension Partners explains his thoughts in this video.