In the world of communication and sales, everything is a “story”. Behind the sale of any product or vision, someone framed a “story”. Hollywood has one story: hope, loss and redemption. Politicians live with “storytellers” whom are constantly trying to keep one step ahead of the “story” in order to shape it.  That’s spin. Archetypes and cliches are stories: the hero, the villian, the victim, the martyr.  Product designers in the world of finance are just modeling “stories”. Notice every mutual fund has some theme and there is a story behind it. The problem with stories is that only some of them are true.  I often joke that investors can’t afford to buy stories that sound good but fail. I learned that the hard way when the bank back in the early 90′s told all of us private bankers a “story” and then we told the clients the story: shift your time deposits into bond funds. They make more interest. We converted millions and then the whole portfolio dropped 15% in a few months as the Fed starting raising rates. I try to really get honest with clients about the reality behind all these stories running around. Most of them are, frankly, half baked. The emerging market story is actually comprised of several stories such as the emerging consumer boom, the disruptive innovation, the commodity story. I and a lot of smarter folks have thought carefully about whether we really believed the emerging market story. The skeptics had some good points but the evidence is growing. It’s like watching a case being built in front of our eyes. If you scroll through the entries in the last year of this blog it is the evolution of the emerging market story.  I keep reminding clients that their are many ways to make money and buying the new global blue chip corporate titans (PetroChina, Vale, Itau, China Aluminum, State Bank of India e.g.) in core sectors (Financials, Energy, Materials) of fast growing marketplaces (China, India, Brazil, frontier markets) is not the only answer.  I simply think it’s the most likely one to become true as a winning strategy, especially if we manage the market volatility to build positions by buying on dips.  In other words, I invest in this story and advise on millions of dollars of good people to do the same.  It’s a sober responsibility and not for the faint hearted.  It’s our best chance to grow wealth.  These emerging market blue chips are still priced as “risk assets” and trade with a lot of volatility.  Nevertheless, I think that is where the momentum lies, emerging and frontier markets, and I believe the evidence is confirming that assessment each day a little more.  I encourage clients to be critical minded in your own common sensical analysis.  Does this story contradict experience and logic?  Does this story and strategic approach make common sense to you?  It’s a good question to think about.

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