“If all you had was $5,000… what would you invest in?”
This was the question I asked maverick investor and financial commentator, Peter Schiff, on Friday.
If you’ve not heard of Peter Schiff, he is famous for predicting the recession and crash of 2008 years before it happened.
Not only was Peter Schiff right about the recession, he was also right about buying gold in 2008 when the metal was under $1000.
So I asked Peter one of my favourite questions: What would he buy right now if all he had was a mere $5,000 (which is what most average folks in America have saved to invest).
Peter’s response was surprising – mostly because it agreed with my own views.
He said: “Emerging markets and gold”.
I already knew that Peter Schiff was a gold bull, but I found it interesting that he mentioned Emerging market stocks.
As you may know, I’ve been pounding the table on buying Emerging Market Stocks since July and September – because they are cheap and undervalued!
After their crash this summer, I said in September that I am buying Singapore, Brazil and India.
Investors who followed my recommendation to buy the Singapore ETF known as “EWS” (iShares MSCI Singapore) are already up 7% in 2 months. Take a look at this chart:
Singapore is strong both fundamentally AND technically:
Fundamentally it is one of the fastest growing economies in Asia. Technically it has blue gamma confirmation on ALL timeframes: Daily, Weekly and Monthly – which shows a powerful upward trend.
But the award for the cheapest and most undervalued emerging market goes to a different country. Take a look at this:
As you will see, Russia is extremely undervalued with a P/E ratio of -35%! Compare that to the P/E ratio of the US markets which is close to +14.
Take a look at this chart of the Russia ETF known as RSX or Market Vectors Russia:
I like RSX in that it has blue gamma confirmation on the daily charts. The weekly chart is neutral (it has a “gap” in its gamma confirmation).
I personally would wait for a correction in the bigger Stock Markets like the S&P 500, before I buy emerging market stocks.
Right now US and most European stocks are in need of a 5 to 8% correction or decline. I definitely do not want to buy a “top”.
For RSX, I would wait for perhaps a re-test of its June or August lows. And for EWS I would wait for a retracement to $13 or lower before I buy again.
Both RSX and EWS and other emerging market stocks can be found on the ETX Capital trading platform.
Alessio Rastani is a stock market trader at www.leadingtrader.com