Rock the Red

Yesterday, Washington D.C. hosted its first major pro-sports team championship parade in 26 years. Not since the Redskins won the Super Bowl in 1992 have Washington fans been able to celebrate their team reaching the pinnacle of their sport. As a lifelong fan of the Capitals (and all local DC teams), I felt I had to be in the city with my two oldest kids, if only to feel the excitement of being in the same place with 100,000+ people celebrating the same gratifying success.

Lyla insisted on the Nationals hat!

Although navigating the throngs of fans was a bit difficult with a 6-year-old and an 8-year-old (read: lots of shoulder rides!), the experience was well worth it. After a parade down Constitution Avenue, team members and coaches were introduced on stage on The Mall between the US Capitol Building and the Washington Monument. Each team member expressed their gratitude for the wonderful fan support, and more than a few toasted the huge crowd with an adult beverage!

A crowd in red shirts gathers in front of a monument
The Red Sea

Certainly, a lot has changed since the early to mid-1990s. Back in 1995, the emerging markets sector (Brazil, Russia, India, China, & South Africa – BRICS) was made up of mostly materials manufacturing and banking. Today, materials represent only 7% of that market, while Information Technology makes up 28%. And, there is a lot of data out there that would indicate emerging markets’ future outperformance of the more developed markets overseas. See the chart below from Bloomberg, MSCI:

From Smokestacks to Computer Chips

As of 31 March 2018
a MSCI Emerging Markets Index
Source: Bloomberg, MSCI

Investing in emerging markets alone can be very intimidating. The volatility is more than most investors can handle. However, it is important that we as investors have exposure to this fast-growing sector. When added to a portfolio, it can actually help reduce the risk of the investment mix as a whole. Believe it or not, emerging markets represent almost 60% of GDP according to Credit Suisse, Haver Analytics, and the International Monetary Fund. Consumer spending in these regions continue to increase, and they have less total debt than their developed counterparts.

Coincidentally, several of the Capitals’ stars originate from Russia, and I will not soon forget their biggest star, Alex Ovechkin, raising the Stanley Cup. Maybe it’s yet another indicator of the growth of emerging markets that the first Russian to play in the NHL was signed in 1989. Today, there are almost 40 Russian-born players in the NHL!

Congratulations again to the Washington Capitals and all of their deserving fans!



Categories : Financial Planning

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