over 2 years ago • 1 min
After a rough ride over the past decade, emerging market (EM) stocks have fallen to the lowest level since 2001 compared to their US counterparts.
The chart above plots the MSCI Emerging Markets Index divided by the S&P 500. It shows how shares in developing markets have spent most of the past three decades at much higher levels relative to the US benchmark. EM stocks only hit lower levels during the tech-fueled bull market of the late ‘90s and early 2000s, which ended in the dot-com bust.
If you believe that measures at extreme levels are likely to revert toward their average before long, EM stocks are currently sending a strong signal they’re worth a look.
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