REPOST: Emerging Markets Hang Tough During Global Selloff

Despite the recent global selloff, emerging markets are coping quite well. Global growth is on an upswing, which is generally a benefit for developing countries. More insights from The Wall Street Journal:

Attendees at a Tencent Holdings’s conference in Guangzhou, China. The near-term growth outlook for the developing world, including China, has improved. PHOTO: QILAI SHEN/BLOOMBERG NEWS

Wild price swings this week upended stocks and bonds around the globe, but some of the historically most volatile markets are holding up better-than-expected compared with past global selloffs.

Since U.S. markets reached a high on Jan. 26, the S&P 500 index is down 10.2%. Emerging-market stocks performed better during much of the recent selloff. The MSCI Emerging Markets Index is now down 8.6% since Jan. 26.

Bonds issued by companies and countries in the developing world started selling off last week, but by Wednesday the spread between emerging-market debt and U.S. Treasurys—or the extra yield investors receive for emerging markets—had narrowed back to levels in late January.

“It’s notable how restrained the negative reaction was this time,” said Sacha Tihanyi, senior emerging-market strategist at TD Securities in New York.

Unlike during some previous global selloffs, where a government default or currency devaluation in Asia, Eastern Europe or Latin America weighed on global markets, “this time the volatility is coming from U.S. markets,” said Katia Bouazza, co-head of global banking for Latin America at HSBC . “It’s not coming from some headline news in the emerging world.”

Investors also point to several positive factors that cushioned the blow. Global growth is on an upswing, a benefit for developing countries that export commodities or are manufacturing hubs.

Read full article HERE.

REPOST: The best ways to invest money

There is no single formula to achieve the best results from any investment endeavor. However, according to Bankrate, the following are the key aspects that can potentially lead you to a sound investing life:

You won’t have to look far when seeking advice on ways to invest money.

There’s the cancer cure stock your cousin loves, the wind farm in Kazakhstan that’ll double your money in a month, the Kickstarter genius who’s definitely the next Steve Jobs. Getting rich is so exciting!

Sorry to say, but in truth the best ways to invest money are usually the most boring.

Investment strategies: An overview

Investing is earning money without going in to work every day; your money does the work for you. But you do pay a price for being able to kick back and watch your bank account grow—and that price is risk.

All but the most conservative forms of investing involve taking some risk, since you could actually lose your money. In fact the riskier the investment the more you stand to gain, which is only fair.

Fortunately, the best ways to invest money include ways to mitigate your risk, mainly by considering two important variables: horizon and diversification.

Understanding your investment horizon

How you invest depends on what you’re saving for. Most people have multiple investment goals, such as buying a home, paying for kids’ college and funding retirement. Each goal has its own horizon.

  • For long-term goals like retirement (or a college fund for a newborn), the best investment will be in stocks, which have the most potential to grow. Of course stock values can also fall, sometimes at heart-stopping rates—but time is on your side because you can “ride out” the inevitable downturns. There is almost no chance that a 40-year investment in the stock market will lose money.
  • By contrast, short-term goals (like a house down payment in four years) should be parked in safe havens like money market accounts. That’s because if the stock market tanks, you won’t have enough time to make your money back.
  • For intermediate goals of a decade or so, a mix of stocks and U.S. government bonds, which are safer than stocks but return more than simple savings accounts, are best. How you arrange that mix will depend on your tolerance for risk.

Of course, as time passes your horizons move closer. As you near retirement you will want to move money out of stocks and into safer investments. Some investment target funds do this for you automatically.

Embracing diversity

It’s one thing to understand how much of your investment should be allocated to stocks. You also need to spread your stock investments among a lot of companies. That way, a downturn in one company or sector won’t wipe you out. If you’re just starting out, you should be investing in mutual funds that put your money into a diverse spectrum of companies.

Keep it simple

If you’re investing for retirement through your employer’s 401(k), you’ll likely be presented with several plans tailored to different risk tolerances. In some cases they do the work for you—including re-balancing your portfolio every year to keep it on track, and adjusting your mix of stocks and bonds as you get older. Likewise, 529 plans for college savings will consider your investment horizon and risk tolerance when allocating funds.

Pay attention to fees charged by investment plans. One percent might seem small but will add up over the years. Your best bet for low fees (0.5 percent or less) and good performance is index funds, which track a particular group of companies like the S&P 500. And when you hear about that hot stock tip, plug your ears and remember that when it comes to investing, boring is best.

Continue reading HERE.

REPOST: Bill Gates utilizing public-private partnerships to help save planet

Stronger public-private partnerships can potentially speed up coordination in energy innovation and investment, helping both the developing world and developed countries establish more environment-friendly practices, products, and services. The full story on The Hill:

This week in Paris, we are witnessing an expanded effort by the private sector to shape new approaches to energy investment that could have important ramifications worldwide.

During the One Planet Summit, Microsoft Co-Founder Bill Gates, who lead the formation of Breakthrough Energy in 2015, announced a new public-private partnership to support more coordination in energy innovation and investment.

Gates also announced that the $1 billion Breakthrough Energy Ventures Fund, which counts him and Jeff Bezos as investors, will invest its “patient capital” in five potentially transformative technology areas. These are landmark announcements.

More innovation and collaboration between the public and private sectors can make a major impact in the energy field, which is a vital sector not only for the developing world, but also for the developed world.

The developing world still lacks important energy infrastructure, and in particular, often lacks access to reliable electricity. The developed world is looking to update its infrastructure to make it more efficient and environmentally friendly, as well as more resilient to changing climate.

Even for a developed country like the U.S., 2017 has been a painful reminder of how extreme weather events can destroy vital infrastructure and set back the economies of affected areas.

The Gates-led Breakthrough Energy Coalition announced it will expand to include major global investors like General Electric, Total and BNP Paribas, and these members will be involved in piloting public-private collaborations with five governments: Canada, the European Commission, France, Mexico and the U.K.

Through these partnerships, Breakthrough Energy Coalition says it will “help these governments review how innovations are developed in each country, help make policy and regulatory recommendations to attract early and mid-stage capital for those innovations, and match promising research with investors interested in commercializing the technology.”

This type of coordination between the public and private sectors is needed, because tightening budgets worldwide and growing deficits have put greater pressure on distributing scarce financial resources to answer various economic needs and demands.

Anemic economic growth, flatlined productivity and rapidly aging populations all suggest that there is no easy way out from under this increasing debt, unless we reconsider how we finance the various demands in an innovative way.

This initiative is important because it takes some of the burden off the public sector and, according to a U.S. Treasury Department paper, “when a public private partnership transfers risks to the private sector that it can manage more cost effectively, it creates value for taxpayers by lowering long-term project costs, improving the quality of services, or both.”

This pilot program on public-private partnerships could also be applied to various policies worldwide to improve the overall process. For example, the U.S. is expected to undertake a large infrastructure project next year.

Involving the private sector in certain aspects of the project at an early stage could leverage best practices, improve the process and help prevent the waste of the taxpayer dollars, as well as bring in private-sector dollars to help fund the project.

In addition to this new public-private initiative, Gates also announced the five initial focus areas of the $1 billion Breakthrough Energy Ventures Fund. The venture fund plans to invest in grid-scale storage, liquid fuels, micro/mini grids for Africa and India, alternative building materials and geothermal energy. The ultimate goal is to figure out an energy pathway to achieve an emission-free future.

Although not explicitly mentioned, the group’s initiative is an example of what many experts call “life cycle assessment.”

According to SETAC in Brussels, life cycle assessment is a “process to evaluate the environmental burdens associated with a product, process, or activity by identifying and quantifying energy and materials used and wastes released to the environment; to assess the impact of those energy and materials used and releases to the environment; and to identify and evaluate opportunities to affect environmental improvements.”

The group’s first investment criteria points to this by stating “only invest in technologies with the potential to reduce at least half a gigaton of greenhouse gases every year.”

The groups’ investment criteria highlight best practices that could decrease waste in the overall process and maximize efficiency. First, they have a clear target goal for selection of their projects: reduce greenhouse gases.

Because they cannot be the only financier of the venture, they state that they will only invest in companies that could ultimately attract additional investment. They also plan to weed out projects at an early stage through consultation with their technical experts so as to not waste valuable capital.

They see themselves as a complement to existing investment in clean-technology and plan to help with basic “portfolio optimization” by focusing on certain areas where they can add value through their global network.

Bill Gates made his mark early on by opening the door of personal computing to millions. His latest Breakthrough Energy initiatives could open the door of prosperity and a cleaner planet to billions and introduce a new way of doing business around the world.

REPOST: How to invest without losing money

Is it really possible to invest in something and not face the risk of losing money? This article on USA Today tries to explain how this may be attainable:

When it comes to returns, time is your friend.

When it comes to investing, realize that risk and reward tend to move in opposite directions. If you take more risks, you run a larger chance of losing your money, but you often have a higher upside.

It’s possible to invest without losing money. In the current market, where interest rates are very low, any investment guaranteed to not lose money will have a very small return.

For most people thinking about investing, the goal is to minimize the potential for losses while maximizing how much you might make. Exactly how you do that — and where you put your money — depends a lot on what type of investor you are, and what your goals are.

There is no one answer

A 67-year-old looking to live off his or her investments has different needs from a 22-year-old planning to work about 45 or so years. In addition, someone with a lot of excess income has different needs from someone struggling to make ends meet.

Whether you’re starting small, even with a few dollars each week, you’ll want to have a diverse portfolio. That means owning not only stocks, but also bonds, cash, and even alternatives such as shares in a real estate investment trust (REIT).

Even within your stock portfolio, you’ll want to diversify. That means owning shares of companies in multiple industries, as well as shares in operations of multiple sizes. By not having all your eggs in one basket, you give yourself protection against outside forces. For example, an event that hurts oil stocks — perhaps a breakthrough in electric-car technology — may benefit shares in parts of the technology sector.

How to be safe

The safest way to invest without losing money is buying cash equivalents. Money markets, Treasuries, certificates of deposit (CDs), and corporate bonds offer generally stable returns with very limited risk, and in some cases no risk at all. The problem is that safety comes with a price.

CDs, to examine one cash equivalent, constitute an agreement in which you give your money to a financial institution for a period of time in exchange for a set interest rate. Perhaps you will receive 2% for a 12-month CD and slightly more for longer periods. These are safe investments, but they also have no upside beyond whatever interest rate you’re being paid.

Continue reading HERE.