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2020.01.05 Penn Wealth Report Vol 8 Issue 01

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Penn Wealth Publishing Subscription Information https://www.pennwealthreport.com Penn Wealth Publishing 9393 West 110th Street 51 Corporate Woods Suite 500 Overland Park, KS 66210 4 penn wealth Report volume 8 issue 01 05 Jan 2020 Penn Wealth Report Copyright 2020. All Rights Reserved. From the Editor/ It is amazing how new paradigms get anchored in the human psyche, and equally amazing how quickly those para- digms can be obliterated. In the ten year period leading into the new millennium, it was all about the New Economy—how tired old industrials would be permanently replaced by cutting-edge information technology firms. Ultimately, that was somewhat true, but those who were fully vested in this thesis in 2000 went on to lose around 75% of their wealth—at least the portion they had invested in the NASDAQ. at is the percentage the tech-heavy index dropped between March of 2000 and October of 2002. Following this debacle, the narrative shifted to emerging mar- kets. In the ten year period between 2000 and 2010, the S&P 500 gained an aggregate 43%, while emerging market econo- mies, as gauged by EEM, the iShares MSCI Emerging Markets ETF, gained 330%. is, in turn, led us into the lost decade for emerging markets (see graph). Market analysts and economists like to portray themselves as forward looking; great prognosticators of the road ahead. But they can't seem to look away from the rear-view mirror. ey put existing data in their proprietary Rube Goldberg machine and out pops a crystal ball. But events have a tendency to unfold in a way that few can effectively predict, and most allow their own beliefs to shape their forward-looking forecasts. ere is a quote some attribute to Mark Twain: "History doesn't repeat itself, but it often rhymes." Whoever first uttered the words, the sentiment is spot on. As applied to what the year has in store for us, we feel relatively confident making a few bold predictions: e great return of emerging markets will be a major story of 2020. We will have a few scary pullbacks in the markets this year, with one in the first quarter. And, for all the hype leading into November, markets will end up liking the out- come of the general elections. —MSH Michael S. Hazell editor-in-chief 2020: The Great Return of Emerging Markets Following a long run of explosive growth, emerging markets suffered a lost decade between 2010 and the beginning of 2020. We expect the following decade to be a very different story.

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