It is a sign of the times we live in when a country that defaulted over six times in the past 100 years, can issue $1.66 Billion 100 year bonds at 5.75%, not only did Mexico issued these bonds, it issued them in British Pound as well.
“More money has been lost reaching for yield than at the point of a gun.” – Raymond DeVoe
It started with India ETFs making new highs, Africa ETFs were next, and now Taiwan & Asia (ex-Japan) ETFs are joining the party. Emerging / Foreign markets are cheap, growing, under-owned, hated and starting to hit new highs, in my book a formula for a trade with a positive edge.
Noise= Emerging markets are dead
Signal= Indian shares at ALL time high
Taleb on Signal Vs Noise:
The more frequently you look at data, the more noise you are disproportionally likely to get (rather than the valuable part called the signal); hence the higher the noise to signal ratio. And there is a confusion, that is not psychological at all, but inherent in the data itself. Say you look at information on a yearly basis, for stock prices or the fertilizer sales of your father-in-law’s factory, or inflation numbers in Vladivostock. Assume further that for what you are observing, at the yearly frequency the ratio of signal to noise is about one to one (say half noise, half signal) —it means that about half of changes are real improvements or degradations, the other half comes from randomness. This ratio is what you get from yearly observations. But if you look at the very same data on a daily basis, the composition would change to 95% noise, 5% signal. And if you observe data on an hourly basis, as people immersed in the news and markets price variations do, the split becomes 99.5% noise to .5% signal. That is two hundred times more noise than signal —which is why anyone who listens to news (except when very, very significant events take place) is one step below sucker.
The Strategy Cycle
Ten Minutes with Howard Marks