Investors also reduced their exposure to other economies deemed likely to follow the Brazilian example, but increased their allocation of money to other markets that, like Brazil, are closely linked to Chinese growth.
Jonathan Garner of Morgan Stanley says that recent fund flows into emerging markets represent a re-allocation of just three-hundredths of one percentage point of global wealth.
If you look at the MSCI Emerging Markets Index, the benchmark allocation of equity allocation among the almost-advanced economies, you see that Argentina is not even among the top 22 countries in this second-tier bunch.
The confidence of all users of financial statements in the transparency and integrity of financial reporting is critically important to the effective functioning of capital markets, efficient capital allocation, global financial stability and sound economic growth.
But free markets are inadequate or fail altogether in the allocation of public goods, in addressing systemic and catastrophic risks and economic externalities.
For an overall allocation to emerging markets, Mr. Hoguet recommends 13% of equities be invested in emerging markets and about 10% of total bonds.
As you noted, price fluctuations occur in the European cap-and-trade system because the initial allocation of credits was too generous, rather than any inherent price volatility in carbon markets.
This passive asset allocation strategy has a long history of outperforming most active management strategies that try to time markets.
For those investors who want some exposure to foreign stocks, Bogle recommends an investment of no more than 20 percent of your total stock allocation, divided equally, into two Vanguard funds: Developed Markets Index Fund and Emerging Markets Index Fund.
The only people who now, apparently, have an interest in the accounts of companies are investors and other market participants who are seeking to make decisions on resource allocation within capital markets.
He says that higher than benchmark weightings are justified in these markets but discourages investors from putting too much of their portfolio in emerging markets--15% to 20% is probably a more appropriate allocation.
The passive form of investing is about reaching your goal by selecting the right asset allocation for your needs, participating in the markets cheaply through index funds and ETFs, and rebalancing the portfolio on occasion to return to its target allocation.
Nobody knows when the music will stop, but the distortion of risk-reward in the public markets makes this an ideal time for investors to consider their portfolio allocation in private markets.
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