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Investors that have grown antsy about emerging market turmoil are even more anxious about frontier markets often dubbed pre-emerging markets. But BlackRock’s Russ Koesterich thinks there are at least three things that distinguish the two markets.
1. “Frontier markets have experienced more robust growth than emerging markets. …Economists expect this trend to continue due to frontier markets’ favourable demographics and the increasing investment in frontier markets’ vast untapped natural resources.”
2. “Frontier markets haven’t performed in lock step with the more developed emerging world. …Frontier markets have been relatively insulated from bouts of capital flight thanks to their robust growth, still low level of foreign ownership and pegged currencies.”
3. “Frontier markets have a much lower correlation with the global market than emerging markets.”
Warren Buffett’s Five Rules For Investing (Fortune Magazine)
Fortune Magazine has an excerpt from Warren Buffett’s annual shareholder letter. Drawing on two of his own investments, Buffett highlighted five fundamental rules of investing.
1. “”You don’t need to be an expert in order to achieve satisfactory investment returns.”
2. “Focus on the future productivity of the asset you are considering.”
3. “If you instead focus on the prospective price change of a contemplated purchase, you are speculating.”
4. “”With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.”
5. “Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important.”
Bonds Face An Uncertain Future (Gluskin Sheff)
The future of bonds is uncertain writes Gluskin Sheff’s David Rosenberg. Citing a Financial Times article, he writes that the bond buying habits of China, Japan and Saudi Arabia “could shift in coming months.” China’s shift towards domestic demand driven-growth will likely see less demand for U.S. bonds. “And note that when the arithmetic is done, it looks as though outside of China, foreign government net buying of Treasuries was non-existent last year. Japan’s shifting current account from surplus to deficit results in a similar conclusion,” he writes.
“And the Saudis have already hinted that they are starting a diversification process away from T-notes and bonds. Then there is the Federal Reserve, as per the NYT column, which bought a net $US542 billion of Treasury securities in 2012, absorbing 71% of the total net new issue activity (versus 61% with QE2 in 2011). And now we have the Fed on track to fully withdraw its support by the end of this year.”
The Massachusetts Securities Division has sent a letter to 25 of the largest 401(k) plan administrators asking for the number of companies that have switched to matching contributions once a year, from more contributions during the year, reports Margaret Collins at Bloomberg News. The regulator is also asking for the information that employees were given about the switch.
“Employers are seeing the opportunities they have to take advantage of the flexibility in the system to short-change participants,” William F. Galvin, Massachusetts chief securities regulator told Collins. “If employers can get away with making changes that help their bottom line and no one is going to complain about it, they’re going to do it.”
Fines Levied By FINRA Fell In 2013 (FA Mag)
Fines by the Financial Industry Regulatory Authority (FINRA) fell to $US57 million in 2013, from $US78 million the previous year, according to a report by Sutherland, Asbill and Brennan LLP, reports FA Mag. This comes even as the number of cases started by FINRA only fell by 6 last year, to 1,535. The restitution FINRA ordered fell from $US34 million in 2012, to $US23.9 million last year. The decline was attributed to the fact that FINRA had already finished the cases that stemmed from the financial crisis that had bigger fines than the cases it is dealing with now.
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