Emerging Markets Offer Long-Term Opportunities : Stocks: It is hoped purchases will turn out winners well beyond din of short-term market.

From Associated Press

Tucked away in mutual fund manager Larry Speidell's wallet is a worn scrap of paper bearing a note he wrote to himself in 1992.

"Don't sell China for 10 years," it reads.

That's a pretty humble, low-tech way to operate for a Harvard Business School graduate with a job title like "director of global and systematic portfolio management."

It shows how even professionals will go to whatever lengths it takes to practice long-term investing in a world of hyperactive markets, instant communications and split-second attention spans.

Speidell, who works for the firm of Nicholas-Applegate Capital Management in San Diego, is an advocate of "emerging markets" investments. Right now many of those markets, in less-developed countries, are reeling from problems that include Mexico's recent peso plunge.

"If we didn't have things like this situation in Mexico, we wouldn't have opportunities like the one we have now to buy emerging countries at attractive prices," Speidell says.

"When people go into emerging markets, they're expecting risk. But some of these countries are being driven by their own engines of growth.

"We're five years into a new period where there's no longer an Iron Curtain, there's no longer a Bamboo Curtain. Give these countries a little more than five years before you write them off."

Many, if not most, managers of stock mutual funds say they think very similar thoughts, whether they invest internationally or within the U.S. markets.

They don't even try to sort out all the news of the moment, the parade of economic statistics, and the jumps and twitches on the charts of the stock market.

Instead, for better or not-so-better, they use the strategy of "bottom-up" investing, picking individual businesses or industries they hope will turn out to be long-term winners through all the din of short-term market noise.

The approach they take can be instructive for individual investors as well, whether you are choosing funds or other places to put your money. Investing with patience is an art that requires practice as well as initial resolve.

"We do not spend a lot of time trying to predict GNP growth, or the weather," says Warren Lammert, manager of the Janus Mercury Fund in Denver, which has attracted a great deal of attention with its performance since it began operating in mid-1993.

"We look for rapid earnings growth, ideally selling at a low multiple relative to the growth rate. We place a lot of value on patience."

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World